Special purpose acquisition companies are now facing the possibility that a recent tax on stock repurchases could also apply to share redemptions involving SPACs.
In a Law360 article, capital markets partner Chris Capuzzi and tax partner Jim Brown discussed a new federal tax that could raise costs for SPACs.
Chris explained that most SPAC trusts specify that interest earned on money held in trust can only be used to pay for income or franchise taxes. He said an excise tax falls into neither of those.
Jim notes that the tax contains exceptions that could lessen the impact on SPACs.
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