BCE's Nortel Distribution Leaves U.S. Investors in a Tax Bind

BCE's (BCE Quote) decision last week to distribute most of its 39% ownership of Nortel Networks (NT Quote) as a dividend could result in a gargantuan tax bill for many of the Canadian telecom's U.S. shareholders.

U.S. taxpayers who want to avoid the tax bill and sell the stock just before the distribution should watch closely: Because it's such a large distribution, the New York Stock Exchange has the option of making the ex-dividend date after the record date -- the opposite of what usually occurs. Shareholders who wait for the ex-dividend date to sell could find that it's too late.

The record date should be declared in late May, a BCE spokesman says. The NYSE will then determine an ex-dividend date. ...