Michael Dell is famous for being the brains behind Dell Computers. Now, he want to take his operations to the next level and buy computer storage maker EMC for $67 billion. That’s a lot. However, there’s only one problem. Dell doesn’t have that kind of money.
This is the biggest deal attempt of its kind to date. Dell has been doing some his homework and feels that he has come up with a clever way to purchase the company. It will be bought with a combination of cash borrowed and a clever maneuver that utilizes a tracking stock. It’s complicated but the big boys likely have a handle on the situation.
Dell’s hope is that the IRS will see the deal as a viable exchange of equity that is tax free. Even if the deal goes through, Dell will have a whopping $50 billion in debt to deal with, and that’s no small sum. The IRS could throw a wrench into matters and deem that the tracking stock is taxable. Insiders, the powers that be, are worried that the IRS will have an unfavorable ruling.
There’s a lot of big money at stake—billions of dollars worth. This is sure to be something that the tech world watches closely.
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Law Offices of Darrin T. Mish, P.A.: Tax Attorney