This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Newcastle Announces Tax Basis Of New Residential Distribution

As previously disclosed, on May 15, 2013, Newcastle Investment Corp. (NYSE: NCT, “Newcastle”) completed the spin-off of New Residential Investment Corp. (NYSE: NRZ, “New Residential”) by distributing shares of New Residential common stock to the holders of Newcastle common stock as of the spin-off record date (“Record Holders”), which was May 6, 2013. If you were not a Record Holder, the following information might not be applicable to you or your shares.

Tax Basis of Distributed New Residential Stock

For U.S. federal income tax purposes, Newcastle intends to report its distribution of shares of New Residential common stock (the “ Distributed Shares”) as a distribution with a fair market value of $6.89 per share. For U.S. federal income tax purposes, this amount will also be Record Holders’ adjusted basis in each Distributed Share.

Impact of Distribution on Newcastle Stockholders

For U.S. federal income tax purposes, Newcastle’s distributions (including cash dividends and stock distributions, which include the Distributed Shares) in any year are treated as ordinary taxable dividends to the extent of its earnings and profits (“E&P”). The distribution of the Distributed Shares creates E&P for 2013 equal to approximately $2.40 per share, which is equal to the fair market value of the Distributed Shares ($6.89 per share) less Newcastle’s tax basis in New Residential’s assets ($4.49 per share).

The taxability of the Distributed Shares will be determined in the context of all Newcastle E&P and distributions, which will not be known until early 2014 . However, solely for illustration purposes, if the taxability of the Distributed Shares was determined on a standalone basis, the following treatment would apply:
  • $2.40 per share would be ordinary taxable income
  • The lesser of $4.49 and the Record Holder’s tax basis in their Newcastle shares would be a non-taxable return of capital
  • If $4.49 exceeds a Record Holder’s tax basis in their Newcastle common stock, the excess will generally be treated as capital gain.

Please note that the taxability of Distributed Shares will not be determined on a standalone basis. The above illustration only reflects the E&P generated by the distribution of the Distributed Shares. Newcastle’s E&P for the year will depend on Newcastle’s other activity for the year, which may increase or decrease the taxable and non-taxable amount of the Distributed Shares. The actual amounts of Newcastle’s E&P, the ordinary taxable income and the non-taxable return of capital will not be available until early 2014.


1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.79 0.10%
FB $101.98 0.07%
GOOG $682.32 -0.12%
TSLA $150.99 0.35%
YHOO $27.04 1.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs