Note I am situated in the UK.
I hold a number of Vodafone of shares in a stocks and shares ISA. My broker has issued the following message to me:
Vodafone has confirmed plans to sell its stake in Verizon Wireless to Verizon Communications. As part of the sale, Vodafone intends to return an estimated $84 billion to investors holding Vodafone shares as at the close of business on the 21 February 2014, partly in Verizon shares and partly in cash (the combined value of which is referred to as the ‘Return of Value’).
The exact number of Verizon shares and value of cash to be returned to shareholders is expected to be announced on 19 February 2014 and 21 February 2014 respectively. Vodafone also plans to carry out a share consolidation of its ordinary share capital.
The Return of Value can be treated as capital (referred to as the B share option) or an income payment (referred to as the C share option) for UK tax purposes. Investors will receive the same value of cash and number of Verizon shares whether they choose capital or income; however, the tax treatment of the combined value (Verizon shares and cash) will differ.
The options are designed to allow shareholders to receive the Verizon shares and cash in a way that best suits their own personal tax situation. However, as you hold your Vodafone shares in an ISA there are no capital gains or income tax implications to consider. Therefore, we will automatically elect for you to receive the Return of Value as capital. If you are happy with this option, you do not need to notify us, however you will need to complete a W-8BEN form (see below).
If you would prefer to receive your Return of Value as an income payment please notify us by noon on Friday 14 February 2014 using the orange Corporate Actions icon alongside your Vodafone shares in your Vantage Stocks & Shares ISA and follow the instructions provided.
First things first what I would like to clear up is that by capital (option B) they mean I will receive Verizon shares... is that the case?
My second piece of confusion (I want to be absolutely certain of this) is with this statement:
as you hold your Vodafone shares in an ISA there are no capital gains or income tax implications to consider.
So even if I opt to receive my return of value as an income payment (option C) I will not be charged either income or capital gains tax on it?