Tax Collector Reaches Out and Touches Telebras Investors

When the Brazilian government announced in May that it was selling its controlling interest in Telecomunicacoes Brasileiras S.A., a.k.a. Telebras, U.S. shareholders probably didn't give a passing thought to the tax consequences.

They were, no doubt, much more interested in tracking their shares in a dozen new companies created by the breakup of the national phone carrier.

Besides, spinoffs happen all the time in the U.S., and they generally are not taxable. The American antecedent of the Telebras breakup -- the spinoff of seven Baby Bells from AT&T (T Quote) in 1984 -- was a tax-free event to shareholders. ...