5 ms·

If you want really want dividends instead of a buyback, just sell your shares in proportion to the percent of the company bought back. It's logically the same

If you want really want dividends instead of a buyback, just sell your shares in proportion to the percent of the company bought back. It's logically the same thing. In both cases you have the same amount of cash and the same ownership of the company (although, you do have to pay a transaction fee to sell shares).

niggler 14y ago
The two things seem the same but are different (as far as taxes are concerned)
- jaggederest 14y ago
  Not since dividends are treated the same as long term capital gains. Unless you've been holding your shares less than a year, you're fine.
  - niggler 14y ago
    Tendering shares for which you have a capital loss triggers a capital loss event, and the amount that you can take a tax loss is limited by other factors (whereas you have to pay full penalty for gains, for losses there is a limit at the individual level). It's not symmetric
- Tuna-Fish 14y ago
  They don't "seem the same", they are exactly the same thing. From the shareholder point of view, they are completely equivalent. The only thing that changes is that if you are completely passive about your holdings, buybacks reward you with a larger stake of the company, while dividends reward you with straight up cash. Either way, you can trade one for the other at market price. If you think there is something wrong with stock buybacks that is not also wrong about dividends, you are simply confused.
  - niggler 14y ago
    When you tender, you trigger a taxable event. If you are sitting on a position with a capital loss, to participate in the buyback you have to take a loss. With a dividend, while you take a tax hit for the dividend, your cost basis is adjusted accordingly (so you don't take a capital gains event) which is important if you have a losing position (you are only allowed to take a certain amount of loss in your tax return under certain circumstances, making the buyback unpalatable in the context of a larger return with other sources of capital loss) Try to do your own taxes this year. It's a learning experience.

niggler 14y ago

The two things seem the same but are different (as far as taxes are concerned)

jaggederest 14y ago
Not since dividends are treated the same as long term capital gains. Unless you've been holding your shares less than a year, you're fine.
- niggler 14y ago
  Tendering shares for which you have a capital loss triggers a capital loss event, and the amount that you can take a tax loss is limited by other factors (whereas you have to pay full penalty for gains, for losses there is a limit at the individual level). It's not symmetric
Tuna-Fish 14y ago
They don't "seem the same", they are exactly the same thing. From the shareholder point of view, they are completely equivalent. The only thing that changes is that if you are completely passive about your holdings, buybacks reward you with a larger stake of the company, while dividends reward you with straight up cash. Either way, you can trade one for the other at market price. If you think there is something wrong with stock buybacks that is not also wrong about dividends, you are simply confused.
- niggler 14y ago
  When you tender, you trigger a taxable event. If you are sitting on a position with a capital loss, to participate in the buyback you have to take a loss. With a dividend, while you take a tax hit for the dividend, your cost basis is adjusted accordingly (so you don't take a capital gains event) which is important if you have a losing position (you are only allowed to take a certain amount of loss in your tax return under certain circumstances, making the buyback unpalatable in the context of a larger return with other sources of capital loss) Try to do your own taxes this year. It's a learning experience.