No distributions were made in 2019 by Trefin Tankers, Ltd and therefore no United States Internal Revenue Service (“IRS”) Form 1099 will be distributed to U.S unitholders. Trefin Tankers, Ltd makes no warranty either expressed or implied regarding any tax issues of its shareholders.
Reverse Stock Split
On November 25, 2019, Trefin Tankers, Ltd effected a one-for-eight reverse stock split of the Company’s Class A common shares, par value $0.01 per share, and Class B common shares, par value $0.01 per share (the Reverse Stock Split). Pursuant to the Reverse Stock Split, every eight shares of the Company’s issued and outstanding Class A common shares were combined into one Class A common share and every eight shares of the Company’s issued and outstanding Class B common shares were combined into one Class B common share, in each case, without any change to the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Instead, each shareholder was entitled to receive a cash payment amount equal to the number of common shares held by the shareholder that would otherwise have been exchanged for the fractional share interest multiplied by the closing price of the Company’s Class A common shares.
Generally, the Company shareholders should not recognize any gain or loss for U.S. Federal income tax purposes other than with respect to cash received for fractional shares, a shareholder’s aggregate tax basis in its post-reverse stock split shares, including any fractional share treated as received and then exchanged for cash, would be the same as the shareholder’s aggregate tax basis of its pre-reverse stock split shares, and a shareholder’s holding period for its post-reverse stock split shares should include its holding period for its pre-reverse stock split shares. Based on Nov 22, 2019 closing pre-reverse split price of $2.49/share, the maximum cash distribution for fractional shares was $17.43 which is less than the $20 de minims reporting threshold for Form 1099. As such, no United States Internal Revenue Service (“IRS”) Form 1099 will be distributed to U.S unitholders with respect to this reverse stock split transaction.
Disclaimer
Related comments are intended as general information only and do not constitute tax advice. This information was not written or intended to be used, and it cannot be used, by any person as a basis for avoiding federal tax penalties that may be imposed on that person. Shareholders should consult their own tax advisors with respect to the specific tax consequences to them.
Trefin Tankers, Ltd was not required to file Form 8937 pursuant to Internal Revenue Code Section 6045B as there was no distributions made in 2019.
