By: Jeff Simmermon at 06:09 am
On March 12, 2009, in connection with Time Warner Cable’s (TWC) separation from Time Warner Inc., TWC paid a Special Cash Dividend to TWC stockholders of $10.27 per share ($30.81 after adjustment for the 1-for-3 Reverse Stock Split).
Now that it’s tax season, a lot of shareholders who received the Special Cash Dividend are asking, “What are the tax consequences of the Special Cash Dividend?”
Shareholders who received the Special Cash Dividend should have also received a 1099-DIV either from our Transfer Agent (BNYMellon Shareowner Services) or through their brokers. Please refer to this document for information regarding the tax consequences of the Special Cash Dividend.
If you haven’t gotten the form, contact your broker or the transfer agent. This is really, really important.
If you need the information on the Special Cash Dividend’s tax consequences for any reason, I’ve summarized it below. Please pardon the legalese:
Stockholders should consult their own tax advisors regarding the particular consequences of the special dividend, which varies by type of stockholder and the applicability and effect of any U.S federal, state and local and foreign tax laws as well as by a stockholder’s respective tax basis and holding period.
Under U.S. federal income tax rules, the Special Dividend generally constitutes a dividend for U.S. federal income tax purposes to the extent paid from TWC’s current or accumulated earnings and profits (“e&p”), as determined under U.S. federal income tax principles. Distributions in excess of e&p generally constitute a return of capital that is applied against and reduces (but not below zero) a stockholder’s adjusted tax basis in TWC common stock. Any remaining excess is treated as a gain as if realized on the sale or other disposition of the stock.
The Company has calculated that 34.18% of the Special Dividend paid to its public shareholders should be characterized by the recipient as a “qualified dividend” paid from e&p for U.S. federal income tax purposes. (This amount was reported in box 1b of the Form 1099-DIV mailed to stockholders of record.) The remainder of the distribution (65.82%) should be characterized as a return of capital to the extent of the stockholder’s adjusted tax basis, with any remainder treated as a gain as if realized on the sale or other disposition of the stock. (This amount was reported in box 3 of the Form 1099-DIV mailed to stockholders of record.)
For further information on TWC please visit our website at www.timewarnercable.com/investors or feel free to contact us at 877-4-INFO-TWC (877-4-4636-892) or ir(AT)twcable.com.
Categories: Investor Relations