That is not a remotely realistic proposal, given Apple's size.
Also, many shareholders will vehemently oppose it legally, since the long-run upside potential is huge, and people want a piece of it. Taking it private will deny them -- people like me -- that opportunity, and it will be fought, believe me. (Look at what's happening with a company with low growth potential, like Dell -- large shareholders are already fighting the move).
The only ones wanting those sorts of outcome are people whose investing horizons are no longer than the lifespan of a gnat.
however, it would keep the shareholders from trying to tell Apple how to run its business.
Exactly. He just cost Apple some money in legal fees and nothing's going to change.
You forgot to mention - you pay $150 in taxes on the $460 dividend you received. So you end up paying a fortune in taxes and are no better off.
The entire thing is ridiculous. Preferred shares don't affect Apple's ability to distribute money to shareholders one bit. Apple could distribute their entire cash holdings to shareholders today if they wanted to - even without preferred shares.
Ultimately, it's advantageous for people like Einhorn because most of the population doesn't understand it and can easily be duped by people who know how it works. Your post is a great example.
He forgot to mention that you pay $150 in taxes, because it is false. Dividends are taxed at a lower 15% rate, so you pay $69 in taxes. The rest of what you say is just false. Einhorn discusses why you can't just distribute the cash at length in his presentation (the fact that Apple would have 33% tax on most of it is only part of the problem). And if "this is bad because I am too dumb to understand it" were a legitimate argument, I know a place when you can get a reasonably priced stone axe.
Exactly. He just cost Apple some money in legal fees and nothing's going to change.
You forgot to mention - you pay $150 in taxes on the $460 dividend you received. So you end up paying a fortune in taxes and are no better off.
The entire thing is ridiculous. Preferred shares don't affect Apple's ability to distribute money to shareholders one bit. Apple could distribute their entire cash holdings to shareholders today if they wanted to - even without preferred shares.
Ultimately, it's advantageous for people like Einhorn because most of the population doesn't understand it and can easily be duped by people who know how it works. Your post is a great example.
He forgot to mention that you pay $150 in taxes, because it is false. Dividends are taxed at a lower 15% rate, so you pay $69 in taxes. The rest of what you say is just false. Einhorn discusses why you can't just distribute the cash at length in his presentation (the fact that Apple would have 33% tax on most of it is only part of the problem). And if "this is bad because I am too dumb to understand it" were a legitimate argument, I know a place when you can get a reasonably priced stone axe.
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
And your point is? The individual tax rate on dividends is still much lower than ordinary income, most apple stock is own by corporations (68%, to be precise), and many of those are not taxed at all (pension funds, charities, etc). So, it is far from "Greenlight pays a lot less taxes than anyone else". Further, if the stock just appreciates without ANY dividends paid out, Greenlight pays no taxes at all, until they liquidate (at which point it is cap gains, netted against losses from their other long term positions), so if the stock would just go up, Greenlight would do better than any dividend scheme.
Further, if the stock just appreciates without ANY dividends paid out, Greenlight pays no taxes at all, until they liquidate (at which point it is cap gains, netted against losses from tcheir other long term positions), so if the stock would just go up, Greenlight would do better than any dividend scheme.
uh huh - yes, Im back.
I think you've just exposed your motivation for posting on this board.
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
I initially did not contest your claim, even though it sounded suspect, but now I have checked. This Dividend received exclusion applies only to C corps owning stock of other C corps. A hedge fund is always a partnership, so for the purposes of taxation it is the same as an individual, so you are just plain wrong. It gets better: this exclusion does not apply to preferred stock even for C corps, see:
Look many of the points you raise are well reasoned and well explained.
Full respect. It's just I disagree that Apple needs some kind of financial advice.
Ill shut up now and vote accordingly.
cheers, and I mean that sincerely
I don't think that Einhorn needs me to defend him (in fact, he has so much money he does not need Apple to do anything, he can just buy an island and live happily ever after). You are right that I generally agree with him, and as for Apple needing financial advice, you may well be right, but Apple has not (to my knowledge) given a credible story of what the money is for, and as far as I can tell, never mind the stock price, it is sitting there turning into toilet paper, since they are earning much less than inflation (Einhorn believes that this misuse of resources is what depresses the stock price, which seems plausible). My estimate of the loss is $4bn a year, which is kind of a lot, even for an outfit the size of Apple (roughly comparable to their entire profit on their computer operation, I would guess). Since I (a) own Apple stock and (b) like many of their products, and would like them to continue making them, I have an opinion ((a) is caused by (b), but (a) is what COMPELS the Apple board to listen to me, and to Einhorn. The management is then obligated to listen to the board). I do believe that Apple is a well-run company in general. However, I believe that their money is mismanaged (I am repeating myself, but I want to make that point very clearly).
What ever comes out of this - I hope it leaves Apple free to continue to develop great products that we all benefit from in our lives. Thats what we pay for.
Without all the noise and ongoing scrutiny of recent times.
At the end of the day whatever the board decides is fine with me.
If it goes to a vote on some issues - whatever comes out of those is what I'll accept. Whether or not I believe those results to be right or wrong.
Ive trusted Apple and its board for over 15 years and have absolutely no reason to doubt them going forward.
It is entirely within its rights to maintain a GROWING savings, regardless of how many billions. The company makes a lot of money, but SPENDS a lot to do so.
I am happy that the company i invest in is so well managed that it has ammassed a hedge against economic hard times for the forseeable future.
Anyone trying to divest Apple of any percentage of that hedge is not only undermining Apple, but undermining shareholders and stakeholders at the same time. It weakens the company against the prospect of uncertain economic shifts.
So Apple needs to create bylaws with what to do with it's savings.
They have no obligation to make their plan public. In fact, making it public will often work against the interests of the company. For example, what if the plan were to buy Sony (not a great idea, but as an example)? Making it public would simply drive up the price. Even if they say "a large consumer electronics company", the price would be driven up.
They've already outlined the plan in general terms - they want money for future investment in technology, acquisitions, for leveraging component purchases, and to pay dividends. They also want enough cushion so that they don't have to stop investment in bad times. There's no reason for them to publicize more detail than that.
Best thing would be to allow for some appeasement each time a savings milestone is reached.
That would allow for some to get a little extra in their pocket while at the same time allowing apple to continue to grow its savings.
If Apple were to have 2 trillion in the bank, everyone should shut up about it. 3 trillion may sound like too much to have in savings, but at the rate Apple's competitors copy them and get away with it added to the rate at which Apple's business is expanding, 3 trillion doesn't seem so excessive. Especially for a company who's cap surpassed Exxon for a while.
I don't know the correct amount. That's the Board of Director's job. If you don't like what they're doing with the company's money, sell the stock and buy something else.
He forgot to mention that you pay $150 in taxes, because it is false. Dividends are taxed at a lower 15% rate, so you pay $69 in taxes. The rest of what you say is just false. Einhorn discusses why you can't just distribute the cash at length in his presentation (the fact that Apple would have 33% tax on most of it is only part of the problem). And if "this is bad because I am too dumb to understand it" were a legitimate argument, I know a place when you can get a reasonably priced stone axe.
The 15% rate is temporary, but it doesn't matter. The point is that you pay taxes on the dividends. Einhorn's proposal creates debt just to pay a dividend which is just ridiculous. The proposal I am referring to has Apple creating a new class of stock and distributing dividends from sale of that stock. Either way, the recipient pays extra taxes - and it does nothing to strengthen the company.
The people who fall for Einhorn's proposal seem to be the ones who are "too dumb to understand it". Apple's board (which has shown itself to be pretty good at running a company and enriching shareholders) and almost every pension fund (including Calpers - possibly the largest in the country) are soundly against it.
Bottom line it that it serves no useful purpose. If Apple wants to increase dividends, they can do so now. Even if they want to borrow money to pay dividends, they can do so now. All the proposal does is created added complexity and expense - and enough confusion that big firms like Einhorn's can take benefit at the expense of smaller investors.
I initially did not contest your claim, even though it sounded suspect, but now I have checked. This Dividend received exclusion applies only to C corps owning stock of other C corps. A hedge fund is always a partnership, so for the purposes of taxation it is the same as an individual, so you are just plain wrong. It gets better: this exclusion does not apply to preferred stock even for C corps, see:
Groan. You're plainly wrong. It's not just C corps. Please, all you've got to do is search for the phrase "corporate dividend exclusion for preferred stock." You'll find dozens of answers. (See, e.g., http://www.answers.com/topic/dividend-exclusion).
Groan. You're plainly wrong. It's not just C corps. Please, all you've got to do is search for the phrase "corporate dividend exclusion for preferred stock." You'll find dozens of answers. (See, e.g., http://www.answers.com/topic/dividend-exclusion).
Stop posting incorrect information on these boards.
You reference (on answers.com) is useless, it gives much less info than my reference (http://macabacus.com/taxes/drd), and my reference is quite specific on the subject.
As for Greenlight Capital being a C corp, you apparently can't read. Your reference does not in any way describe their corporate structure. However, if you look at one of Einhorn's letters to investors (http://www.manualofideas.com/files/blog/greenlight2008.pdf), you will see that the letter begins with
Dear Partner,
Greenlight Capital, L.P, Greenlight Capital Qualified, L.P., and Greenlight Capital Offshore Ltd returned...
Indicating that Greenlight is a limited partnership. There is also an S-corp (I assume), which is the management company, but that does not actually hold any assets.
You reference (on answers.com) is useless, it gives much less info than my reference (http://macabacus.com/taxes/drd), and my reference is quite specific on the subject.
As for Greenlight Capital being a C corp, you apparently can't read. Your reference does not in any way describe their corporate structure. However, if you look at one of Einhorn's letters to investors (http://www.manualofideas.com/files/blog/greenlight2008.pdf), you will see that the letter begins with
Dear Partner,
Greenlight Capital, L.P, Greenlight Capital Qualified, L.P., and Greenlight Capital Offshore Ltd returned...
Indicating that Greenlight is a limited partnership. There is also an S-corp (I assume), which is the management company, but that does not actually hold any assets.
First, a piece of advice, for future reference: don't call posters "idiots." You'll get reported and likely be warned. (I have absolutely no issue if you want to challenge a post -- including mine -- as being 'idiotic'.)
In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:
(1) 70 percent, in the case of dividends other than dividends described in paragraph (2) or (3);
(2) 100 percent, in the case of dividends received by a small business investment company operating under the Small Business Investment Act of 1958 (15 U.S.C. 661and following); and
(3) 100 percent, in the case of qualifying dividends (as defined in subsection (b)(1)).
Go to Page 3: They are registered as a Corporation (the form also makes it supremely clear that they are not a sole proprietorship, not an LLP, not a partnership, not an LLC, not an LP).
First, a piece of advice, for future reference: don't call posters "idiots." You'll get reported and likely be warned. (I have absolutely no issue if you want to challenge a post -- including mine -- as being 'idiotic'.)
Second, here's the actual statement from the US Code. http://www.law.cornell.edu/uscode/text/26/243. It refers to 'corporations'. That was the basis for my original comment. [SIZE=14px]
[/SIZE]
[SIZE=14px](a) General rule[/SIZE] [SIZE=14px]In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:[/SIZE] [SIZE=14px](1) 70 percent, in the case of dividends other than dividends described in paragraph (2) or (3);[/SIZE] [SIZE=14px](2) 100 percent, in the case of dividends received by a small business investment company operating under the Small Business Investment Act of 1958 (15 U.S.C. 661and following); and[/SIZE] [SIZE=14px](3) 100 percent, in the case of qualifying dividends (as defined in subsection (b)(1)).[/SIZE] [SIZE=14px]
[/SIZE]
Third, here's the actual registration filing from Greenlight Capital, Inc. with the SEC, not some PDF of a letter from five years ago that you pulled out: http://www.adviserinfo.sec.gov/iapd/content/viewform/adv112011/Sections/iapd_AdvFormOfOrgSection.aspx?ORG_PK=157083&RGLTR_PK=50000&STATE_CD=&FLNG_PK=015F731800080160015AFC2003B6AC19056C8CC0 Go to Page 3: They are registered as a [SIZE=14px]Corporation[/SIZE] (the form also makes it supremely clear that they are not a sole proprietorship, not an LLP, not a partnership, not an LLC, not an LP).
Got it?
Just to explain it further to the other person, it is not uncommon for these large corporations to have similar sounding names in their subsidiaries so it's easy to be confused. It might have Megagroup, Inc (corporation) for the holding company and then have lots of different Megagroup subsidiaries with similar names. Some of these might be LLC or LP organizations - which is probably the case with the letter he cited.
First, a piece of advice, for future reference: don't call posters "idiots." You'll get reported and likely be warned. (I have absolutely no issue if you want to challenge a post -- including mine -- as being 'idiotic'.)
In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:
(1) 70 percent, in the case of dividends other than dividends described in paragraph (2) or (3);
(2) 100 percent, in the case of dividends received by a small business investment company operating under the Small Business Investment Act of 1958 (15 U.S.C. 661and following); and
(3) 100 percent, in the case of qualifying dividends (as defined in subsection (b)(1)).
Go to Page 3: They are registered as a Corporation (the form also makes it supremely clear that they are not a sole proprietorship, not an LLP, not a partnership, not an LLC, not an LP).
Got it?
Let's begin at the beginning. Presumably if anyone is still reading this, they are not interested in my feelings or yours, so I will leave this until the end.
Now. You had claimed that Greenlight Capital would benefit for preferential dividend treatment, because it is a corporation. This claim is false. The stock is held by a hedge fund (one of the many L.P.s referenced in Einhorn's letter -- since 2009 he has more investment vehicles, so he now refers to the Partnerships, without enumerating them). Greenlight Capital in your SEC filing is the management company, which is an investment advisor running all these partnerships. It owns nothing, except the services of David Einhorn and his associates. For providing these services, it gets a management fee, which is a flat percentage of AUM, and is (minus the expenses, such as people's salary, rent on office space, and so on) taxed as ordinary income. Each fund has a general partner entity, which receives the incentive allocation. General Partners are generally S-Corps. It is possible that some of the limited partners in the funds are corporations, and thus might care about the tax treatment of dividends, but Greenlight does not, since their incentive allocation is based on the pretax earnings. So, this settles the veracity of your original assertion about Einhorn's "self-serving" proposal (by the way, I don't disagree that it is self-serving, but it is enlightened self-interest, and it does not appear to be self-serving in the narrow tax-code sense).
A second question (now of academic interest) is whether preferred dividends are, to some extent, tax deductible, if the recipient is a corporation. The answer is "it's complicated". My source oversimplified the situation, your source did not address it at all. You are the one who brought it up, so I would say the burden of proof is on you.
Finally, for the personal matters. Firstly, I don't give a flying f*** if I get censured, but I don't appreciate being threatened. Nor do I appreciate being called a liar, or being talked down to (as in "Got it?", or "let me give you some advice") -- you have no idea who I am, what I know, or what I do. Any person who does any of these things, and does not expend the effort to make sure his factual statements are correct, to boot is an idiot in my book, but I am willing to give you a pass this once -- we all have bad days, and this may have been one of yours.
Comments
Quote:
Originally Posted by anantksundaram
That is not a remotely realistic proposal, given Apple's size.
Also, many shareholders will vehemently oppose it legally, since the long-run upside potential is huge, and people want a piece of it. Taking it private will deny them -- people like me -- that opportunity, and it will be fought, believe me. (Look at what's happening with a company with low growth potential, like Dell -- large shareholders are already fighting the move).
The only ones wanting those sorts of outcome are people whose investing horizons are no longer than the lifespan of a gnat.
however, it would keep the shareholders from trying to tell Apple how to run its business.
Quote:
Originally Posted by jragosta
Exactly. He just cost Apple some money in legal fees and nothing's going to change.
You forgot to mention - you pay $150 in taxes on the $460 dividend you received. So you end up paying a fortune in taxes and are no better off.
The entire thing is ridiculous. Preferred shares don't affect Apple's ability to distribute money to shareholders one bit. Apple could distribute their entire cash holdings to shareholders today if they wanted to - even without preferred shares.
Ultimately, it's advantageous for people like Einhorn because most of the population doesn't understand it and can easily be duped by people who know how it works. Your post is a great example.
He forgot to mention that you pay $150 in taxes, because it is false. Dividends are taxed at a lower 15% rate, so you pay $69 in taxes. The rest of what you say is just false. Einhorn discusses why you can't just distribute the cash at length in his presentation (the fact that Apple would have 33% tax on most of it is only part of the problem). And if "this is bad because I am too dumb to understand it" were a legitimate argument, I know a place when you can get a reasonably priced stone axe.
Quote:
Originally Posted by quinney
Very good point. Anyone who reads the judge's ruling will see that several of Einhorn's corporate entities are "offshore".
As are Apple's. What's your point?
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
Quote:
Originally Posted by anantksundaram
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
And your point is? The individual tax rate on dividends is still much lower than ordinary income, most apple stock is own by corporations (68%, to be precise), and many of those are not taxed at all (pension funds, charities, etc). So, it is far from "Greenlight pays a lot less taxes than anyone else". Further, if the stock just appreciates without ANY dividends paid out, Greenlight pays no taxes at all, until they liquidate (at which point it is cap gains, netted against losses from their other long term positions), so if the stock would just go up, Greenlight would do better than any dividend scheme.
Quote:
Originally Posted by igriv
Further, if the stock just appreciates without ANY dividends paid out, Greenlight pays no taxes at all, until they liquidate (at which point it is cap gains, netted against losses from tcheir other long term positions), so if the stock would just go up, Greenlight would do better than any dividend scheme.
uh huh - yes, Im back.
I think you've just exposed your motivation for posting on this board.
Forgive my lack of comprehension....
Quote:
Originally Posted by RobM
uh huh - yes, Im back.
I think you've just exposed your motivation for posting on this board.
Forgive my lack of comprehension....
I must be dense -- perhaps you can explain my motivation to me...
Quote:
Originally Posted by anantksundaram
Actually Einhorn's preferreds have quite a bit of tax-related self-interest. As a corporation, Greenlight capital does not have to pay taxes on 80% of any preferred dividends received. But individuals have to pay taxes on all of their preferred dividend. That's the law.
I initially did not contest your claim, even though it sounded suspect, but now I have checked. This Dividend received exclusion applies only to C corps owning stock of other C corps. A hedge fund is always a partnership, so for the purposes of taxation it is the same as an individual, so you are just plain wrong. It gets better: this exclusion does not apply to preferred stock even for C corps, see:
http://macabacus.com/taxes/drd
err, champion of Einhorn.
Look many of the points you raise are well reasoned and well explained.
Full respect. It's just I disagree that Apple needs some kind of financial advice.
Ill shut up now and vote accordingly.
cheers, and I mean that sincerely
Quote:
Originally Posted by RobM
err, champion of Einhorn.
Look many of the points you raise are well reasoned and well explained.
Full respect. It's just I disagree that Apple needs some kind of financial advice.
Ill shut up now and vote accordingly.
cheers, and I mean that sincerely
I don't think that Einhorn needs me to defend him (in fact, he has so much money he does not need Apple to do anything, he can just buy an island and live happily ever after). You are right that I generally agree with him, and as for Apple needing financial advice, you may well be right, but Apple has not (to my knowledge) given a credible story of what the money is for, and as far as I can tell, never mind the stock price, it is sitting there turning into toilet paper, since they are earning much less than inflation (Einhorn believes that this misuse of resources is what depresses the stock price, which seems plausible). My estimate of the loss is $4bn a year, which is kind of a lot, even for an outfit the size of Apple (roughly comparable to their entire profit on their computer operation, I would guess). Since I (a) own Apple stock and (b) like many of their products, and would like them to continue making them, I have an opinion ((a) is caused by (b), but (a) is what COMPELS the Apple board to listen to me, and to Einhorn. The management is then obligated to listen to the board). I do believe that Apple is a well-run company in general. However, I believe that their money is mismanaged (I am repeating myself, but I want to make that point very clearly).
What ever comes out of this - I hope it leaves Apple free to continue to develop great products that we all benefit from in our lives. Thats what we pay for.
Without all the noise and ongoing scrutiny of recent times.
At the end of the day whatever the board decides is fine with me.
If it goes to a vote on some issues - whatever comes out of those is what I'll accept. Whether or not I believe those results to be right or wrong.
Ive trusted Apple and its board for over 15 years and have absolutely no reason to doubt them going forward.
Quote:
Originally Posted by Slurpy
This guy has one of the most shit-faced expressions I've ever seen. You can just tel he's a smug, obnoxious, annoying asshole.
Well, he looks like Eastern European-descent douchemaster Adam Sandler, so no surprises there.
Apple has a plan. It is apparently discussed at every Board of Directors meeting.
They have no obligation to make their plan public. In fact, making it public will often work against the interests of the company. For example, what if the plan were to buy Sony (not a great idea, but as an example)? Making it public would simply drive up the price. Even if they say "a large consumer electronics company", the price would be driven up.
They've already outlined the plan in general terms - they want money for future investment in technology, acquisitions, for leveraging component purchases, and to pay dividends. They also want enough cushion so that they don't have to stop investment in bad times. There's no reason for them to publicize more detail than that.
I don't know the correct amount. That's the Board of Director's job. If you don't like what they're doing with the company's money, sell the stock and buy something else.
The 15% rate is temporary, but it doesn't matter. The point is that you pay taxes on the dividends. Einhorn's proposal creates debt just to pay a dividend which is just ridiculous. The proposal I am referring to has Apple creating a new class of stock and distributing dividends from sale of that stock. Either way, the recipient pays extra taxes - and it does nothing to strengthen the company.
The people who fall for Einhorn's proposal seem to be the ones who are "too dumb to understand it". Apple's board (which has shown itself to be pretty good at running a company and enriching shareholders) and almost every pension fund (including Calpers - possibly the largest in the country) are soundly against it.
Bottom line it that it serves no useful purpose. If Apple wants to increase dividends, they can do so now. Even if they want to borrow money to pay dividends, they can do so now. All the proposal does is created added complexity and expense - and enough confusion that big firms like Einhorn's can take benefit at the expense of smaller investors.
Quote:
Originally Posted by igriv
I initially did not contest your claim, even though it sounded suspect, but now I have checked. This Dividend received exclusion applies only to C corps owning stock of other C corps. A hedge fund is always a partnership, so for the purposes of taxation it is the same as an individual, so you are just plain wrong. It gets better: this exclusion does not apply to preferred stock even for C corps, see:
http://macabacus.com/taxes/drd
Groan. You're plainly wrong. It's not just C corps. Please, all you've got to do is search for the phrase "corporate dividend exclusion for preferred stock." You'll find dozens of answers. (See, e.g., http://www.answers.com/topic/dividend-exclusion).
Second item where you pulled things out of your hat: Greenlight Capital is registered as a corporation, not a partnership. http://investment-advisors.findthebest.com/l/38103/GREENLIGHT-CAPITAL-INC
Stop posting incorrect information on these boards.
Quote:
Originally Posted by anantksundaram
Groan. You're plainly wrong. It's not just C corps. Please, all you've got to do is search for the phrase "corporate dividend exclusion for preferred stock." You'll find dozens of answers. (See, e.g., http://www.answers.com/topic/dividend-exclusion).
Second item where you pulled things out of your hat: Greenlight Capital is registered as a corporation, not a partnership. http://investment-advisors.findthebest.com/l/38103/GREENLIGHT-CAPITAL-INC
Stop posting incorrect information on these boards.
You reference (on answers.com) is useless, it gives much less info than my reference (http://macabacus.com/taxes/drd), and my reference is quite specific on the subject.
As for Greenlight Capital being a C corp, you apparently can't read. Your reference does not in any way describe their corporate structure. However, if you look at one of Einhorn's letters to investors (http://www.manualofideas.com/files/blog/greenlight2008.pdf), you will see that the letter begins with
Dear Partner,
Greenlight Capital, L.P, Greenlight Capital Qualified, L.P., and Greenlight Capital Offshore Ltd returned...
Indicating that Greenlight is a limited partnership. There is also an S-corp (I assume), which is the management company, but that does not actually hold any assets.
Quote:
Originally Posted by igriv
You reference (on answers.com) is useless, it gives much less info than my reference (http://macabacus.com/taxes/drd), and my reference is quite specific on the subject.
As for Greenlight Capital being a C corp, you apparently can't read. Your reference does not in any way describe their corporate structure. However, if you look at one of Einhorn's letters to investors (http://www.manualofideas.com/files/blog/greenlight2008.pdf), you will see that the letter begins with
Dear Partner,
Greenlight Capital, L.P, Greenlight Capital Qualified, L.P., and Greenlight Capital Offshore Ltd returned...
Indicating that Greenlight is a limited partnership. There is also an S-corp (I assume), which is the management company, but that does not actually hold any assets.
First, a piece of advice, for future reference: don't call posters "idiots." You'll get reported and likely be warned. (I have absolutely no issue if you want to challenge a post -- including mine -- as being 'idiotic'.)
Second, here's the actual statement from the US Code. http://www.law.cornell.edu/uscode/text/26/243. It refers to 'corporations'. That was the basis for my original comment.
-----
(a) General rule
In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:
-----
Third, here's the actual registration filing from Greenlight Capital, Inc. with the SEC, not some PDF of a letter from five years ago that you pulled out: http://www.adviserinfo.sec.gov/iapd/content/viewform/adv112011/Sections/iapd_AdvFormOfOrgSection.aspx?ORG_PK=157083&RGLTR_PK=50000&STATE_CD=&FLNG_PK=015F731800080160015AFC2003B6AC19056C8CC0
Go to Page 3: They are registered as a Corporation (the form also makes it supremely clear that they are not a sole proprietorship, not an LLP, not a partnership, not an LLC, not an LP).
Got it?
Just to explain it further to the other person, it is not uncommon for these large corporations to have similar sounding names in their subsidiaries so it's easy to be confused. It might have Megagroup, Inc (corporation) for the holding company and then have lots of different Megagroup subsidiaries with similar names. Some of these might be LLC or LP organizations - which is probably the case with the letter he cited.
Downside to 'applesupertramps' mutation of the Einhorn proposal -- a sudden huge cash dividend like that would
create a tax nightmare for many. When holding AAPL in a taxable account (even if classified as a "qualified dividend")
this could slingshot some modest holders into paying 23.8% of that to the feds, plus another 10% in state tax
in several states). Many of us would prefer a steady dividend that doesn't boost one into a higher tax bracket.
Quote:
Originally Posted by anantksundaram
First, a piece of advice, for future reference: don't call posters "idiots." You'll get reported and likely be warned. (I have absolutely no issue if you want to challenge a post -- including mine -- as being 'idiotic'.)
Second, here's the actual statement from the US Code. http://www.law.cornell.edu/uscode/text/26/243. It refers to 'corporations'. That was the basis for my original comment.
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(a) General rule
In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:
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Third, here's the actual registration filing from Greenlight Capital, Inc. with the SEC, not some PDF of a letter from five years ago that you pulled out: http://www.adviserinfo.sec.gov/iapd/content/viewform/adv112011/Sections/iapd_AdvFormOfOrgSection.aspx?ORG_PK=157083&RGLTR_PK=50000&STATE_CD=&FLNG_PK=015F731800080160015AFC2003B6AC19056C8CC0
Go to Page 3: They are registered as a Corporation (the form also makes it supremely clear that they are not a sole proprietorship, not an LLP, not a partnership, not an LLC, not an LP).
Got it?
Let's begin at the beginning. Presumably if anyone is still reading this, they are not interested in my feelings or yours, so I will leave this until the end.
Now. You had claimed that Greenlight Capital would benefit for preferential dividend treatment, because it is a corporation. This claim is false. The stock is held by a hedge fund (one of the many L.P.s referenced in Einhorn's letter -- since 2009 he has more investment vehicles, so he now refers to the Partnerships, without enumerating them). Greenlight Capital in your SEC filing is the management company, which is an investment advisor running all these partnerships. It owns nothing, except the services of David Einhorn and his associates. For providing these services, it gets a management fee, which is a flat percentage of AUM, and is (minus the expenses, such as people's salary, rent on office space, and so on) taxed as ordinary income. Each fund has a general partner entity, which receives the incentive allocation. General Partners are generally S-Corps. It is possible that some of the limited partners in the funds are corporations, and thus might care about the tax treatment of dividends, but Greenlight does not, since their incentive allocation is based on the pretax earnings. So, this settles the veracity of your original assertion about Einhorn's "self-serving" proposal (by the way, I don't disagree that it is self-serving, but it is enlightened self-interest, and it does not appear to be self-serving in the narrow tax-code sense).
A second question (now of academic interest) is whether preferred dividends are, to some extent, tax deductible, if the recipient is a corporation. The answer is "it's complicated". My source oversimplified the situation, your source did not address it at all. You are the one who brought it up, so I would say the burden of proof is on you.
Finally, for the personal matters. Firstly, I don't give a flying f*** if I get censured, but I don't appreciate being threatened. Nor do I appreciate being called a liar, or being talked down to (as in "Got it?", or "let me give you some advice") -- you have no idea who I am, what I know, or what I do. Any person who does any of these things, and does not expend the effort to make sure his factual statements are correct, to boot is an idiot in my book, but I am willing to give you a pass this once -- we all have bad days, and this may have been one of yours.
Got it?