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SSW -- taxation of their distributions for US shareholders


ERICOPOLY
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I didn't realize this about SSW dividends until just a moment ago:

 

Take a look at 2008 for example.  They paid out $1.90 in total per share.  Only $0.29 of that was taxable as a dividend -- the rest as a return of capital (not taxable as a dividend). 

 

http://ir.seaspancorp.com/distributions.cfm

 

For U.S. federal income tax purposes, every distribution made by a corporation is made out of earnings and profits to the extent thereof and from the most recently accumulated earnings and profits. Distributions received by Seaspan's common shareholders should be first treated as taxable dividend to the extent of Seaspan's current and accumulated earnings and profits that are allocated to the common shares. To the extent the Distribution exceeds Seaspan's current and accumulated earnings and profits that are allocated to the common shares, but does not exceed the common shareholders' tax basis in Seaspan's stock, it should be treated as a non-taxable return of capital. To the extent the Distribution exceeds the common shareholders' tax basis in Seaspan's stock, it should generally be treated as capital gains.

 

Sorry, but this does not apply to Canadians.

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Hi Eric,  Not only that but my broker just reduced the margin loan on SSW from 50% to 0% two days ago for some strange reason.  This is not a major issue as I am not borrowing much anymore relative to my portfolio size.  A minor hassle since I need to convert a large number of FFH options in the next few days, and want to hold onto as much FFH common as I can.

 

Has your broker changed the margin requirements on Seaspan?

 

I cant figure where this is coming from since unless there is a debt/equity requirement but why would it be triggered so suddenly.  I am going to send a note and ask them to review this.

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