Evaluating the New Stock Buyback Tax

Evaluating the New Stock Buyback Tax

Blog Keeping Current: Disclosure and Governance Developments
In the Inflation Reduction Act of 2022, Public Law 117-169, one of the headline tax changes is a 1% excise tax on stock repurchases by public companies. The tax takes effect on January 1, 2023 and public issuers should be aware that the new tax extends broadly to situations beyond run-of-the-mill share repurchases. The provision for netting new issuances against repurchases can operate in unexpected ways and companies should analyze the potential application of this tax to any transaction involving the purchase, exchange or transfer of their stock. 

In this WilmerHale client alert titled “Surprises and Questions Around the New Stock Buyback Tax,” our tax specialists share key highlights from the new excise tax, such as what companies are subject to the tax, what exceptions there are from the tax and what transactions other than buy-backs may be subject to the tax. 

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