Amazing Deal, page-37

Hi @lotm,

Thanks, having done some more reading I'm totally confused, so anyone who read my last post please completely ignore it for now! I'm still investigating and I think I'll need to talk to someone who's an expert.

I now think it's US federal income tax that is the main tax, which is 35% but since it's capital gains tax on a long held asset (or at least the significant part of the leases are 12 months+) the the rate seems to be 15% (although I'm still not sure if that applies to corporations). Also it seems like Texas is a very low taxing state, and their franchise/margin tax is < 1%. That would get us back to AU federal 30% tax as the critical rate, but would also allow for full deductibility of company expenses.

Does anyone know if the impairments of the value of the BBEP shares are tax deductible in Australia? I can't find an answer to that anywhere online. I suspect not - probably not until the shares are sold...?

Anyway, here are a few links if anyone is interested..

https://en.m.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States
https://en.m.wikipedia.org/wiki/Corporate_tax_in_the_United_States
http://www2.deloitte.com/content/da...-and-Resources/dttl-er-US-oilandgas-guide.pdf
https://en.m.wikipedia.org/wiki/State_income_tax
http://www.oilandgas360.com/texas-reduces-franchise-tax-by-25/

This may be academic: I agree with LOTM that JC is very unlikely to just pay eg 35% tax. He will try to minimise it and will buy more leases, or another company etc. it's what AZZ is as a company. So really the question is for someone valuing the company: in the most likely scenario where JC tries to minimise tax, how much tax will AZZ end up paying?

I will ring the company next week to try to find out in a scenario where the spend say $125m on assets that reduce tax. If anyone else gets to talk to the company, can you please ask?

For me, I don't plan to sell AZZ unless it becomes overvalued by say 20%, so understanding the value is important! Hopefully we will get more details from AZZ soon including the likely expected overall NTA position if both deals complete and I will stop thinking about it!

Cheers,
Pb