Finshots Daily Why are companies rushing for buybacks before October?
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Aug 20, 2024 Companies are scrambling for share buybacks as new tax rules loom on the horizon. The shift in tax burdens from companies to shareholders creates urgency. Many are eager to complete buybacks before October 1st to maximize strategic benefits. This surge reflects broader trends in corporate finance and the shifting landscape of investor relations.
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Buybacks Explained
- Companies can buy back their own shares from investors, often at a higher price than market value.
- This gives investors cash, while the company recovers shares.
Buyback Tax Changes
- Starting October 1st, 2024, buyback taxes shift from companies to shareholders.
- This change treats buyback proceeds as dividend income, impacting shareholder taxation.
Reasons for Buybacks
- Companies buy back shares for reasons like excess cash or rewarding shareholders.
- Shifting the tax burden to shareholders reduces returns, prompting buybacks before October.