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Sunday, November 18, 2012 - Page updated at 07:30 p.m.
The Motley Fool: Every Sunday, useful tips on investing
Ask The Fool
Q: When one company spends millions of dollars buying another, where does that money actually go?
A: If it pays cash, the money goes to the shareholders of the acquired firm.
There can also be payments to other owner classes, such as holders of preferred stock.
Or some of the cash tendered may go to debt holders, if part of the purchase price is allocated to buying back debt.
If the acquirer buys with its own stock, then shareholders of the acquired firm will get shares of the acquiring company in exchange for their acquired-firm stock.
They can sell these shares for cash or simply hold on.
Companies typically buy other companies for more than their pre-purchase market price, paying a “premium.”
Some purchases involve combinations of cash and stock.
In all-stock transactions, no cash trades hands.
Various life changes bring celebrations or condolences, and they often bring tax changes, too. Pay attention to those, or risk ending up with headaches or unnecessary costs. For example, a new job means you’ll fill out a W-4 form. Do so carefully, lest you end up having too much or too little withheld.
Divorcing? Adjust your withholding to reflect your new filing status. With the splitting of marital assets, your other income (such as interest and dividends) will change, and mortgage interest may be divided or eliminated.
Assets will also be divided, and the tax impact will follow the person who retains the property. Forced sales of assets might generate capital gains.
Alimony is generally taxable to the person receiving it and deductible by the person paying it, but child support is neither taxable to the recipient nor deductible by payer. Your filing status is based on the last day of the tax year, too.
There’s much more to know about these and other life changes (such as adoptions, disasters, unemployment, etc.). To learn more, visit IRS.gov. The IRS website even sports a W-4 calculator tool to help you. Better still, consult a tax pro.
Clean Energy Fuels (Nasdaq: CLNE) is powering our way to a sustainable energy future by providing natural gas for trucking fleets in the U.S. and Canada.
The company is building “America’s Natural Gas Highway.” If accomplished, the network of natural-gas fueling stations along busy trucking routes would spark even greater demand for nat-gas-powered engines.
Of course, this would lead to considerably more business for Clean Energy Fuels.
There’s risk, though. Clean Energy Fuels has yet to post a profit.
On the plus side, Clean Energy already has 530 fleet customers, and its revenue has been growing by more than 20 percent annually over the past five years.
This investment is a long-term one and needs time to deliver on its promise.
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