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Cyclical -- Or Ripple Effect of 2008?<br><br>
The number and complexity of corporate events persist, even three years after the 2008 financial crisis. The increase in spin-offs may purely be cyclical, as companies go from an increase in merger activity to more divestments that unlock shareholder value in separate businesses, said John Kareken, senior tax analyst at Wolters Kluwer Financial Services. On the other hand, the number and complexity of corporate events, especially rights offerings, may indicate continued challenges resulting from the 2008 financial crisis, as companies look for ways to raise capital and restructure, or the need to reconfigure their businesses to meet current economic conditions.
General Motors (Bankruptcy)<br><br>
The old General Motors, on completing its bankruptcy reorganization, distributed stock and two classes of warrants in the new General Motors to debt holders of the old General Motors. There was uncertainty as to the taxability of the receipt of the stock and warrants, and although generally holders treated the distributions as nontaxable, there was still the problem of apportioning the holder's basis in the old General Motors debt to the stock and warrants.