The IRS ruled on April 25 (PLR 201230008) that certain warrants
issued by a corporation were treated as stock. In PLR 201230008, a
corporation (Distributing) had warrants outstanding that were
issued in connection with, and on the same date as, debt related to
a "note and warrant purchase agreement."
The warrants provided that (i) if Distributing paid a dividend
or distribution on its stock in cash or property, Distributing
would pay the warrant holders as if their respective warrant was
exercised immediately prior to the record date of such dividend
declaration (the dividend right); (ii) and if Distributing made a
liquidating distribution to its shareholders, the warrant holders
would receive property as if they had exercised their warrants
before the date of such liquidating distribution (the liquidation
right).
