Associates First Capital Corporation Spin-off Basis Allocation Information for U.S. Taxpayers
On April 7, 1998, Ford Motor Company ("Ford") distributed all of the common stock of Associates First Capital Corporation ("Associates") owned by Ford to Ford Common and Class B shareholders of record as of the close of business on March 12, 1998. Each shareholder received .262085 shares of Associates for each Ford share owned as of the record date.
Ford received a ruling from the U. S. Internal Revenue Service that a Ford shareholder's receipt of Associates stock is tax-free for U.S. Federal income tax purposes. Shareholders selling The Associates shares have a taxable gain or loss equal to the difference between the sales proceeds and the tax basis in the shares. To determine the tax basis, shareholders allocate the original tax basis in their Ford shares between the Ford shares and The Associates shares based on their relative fair market values on the distribution date.
Based upon the average high and low prices at which Ford and Associates traded on the New York Stock Exchange on April 7, 1998, 66.41% percent of the pre-distribution tax basis in Ford shares should remain allocated to the Ford shares, and the remaining 33.59% should be allocated to The Associates shares (including any fractional share interest). Shareholders should consult a tax advisor regarding the application of this calculation to their particular circumstances.
Download the pdf version of full instructions, calculation examples, and forms, which must be filed with the U.S. Internal Revenue Service.
