SPACs Get a Belated Tax Break

Welcome to the Daily Dish. We are your morning briefing for the SPAC market. Every day we'll provide you a digest of the top headlines of the previous day and an outline of the day ahead.

In today's dish, get a late relief from the inflation reduction act, which could prove to be a short-term boost for those on the hunt for deals. Also, a SPAC is taking a biotech company public, and a blank-cheque firm ends merger talks with an Asia-headquartered material technology company. Read on to find out the latest about all things SPACs. 


SPACs Get a Tax Relief Surprise

  • A provision in the inflation reduction act of 2022 levying a 1% buyback tax on SPAC liquidations triggered a frenzy of liquidations late last year, but a tax relief has finally come from the IRS. 

The uncertain market conditions, coupled with the possibility of taxes, led 85 SPACs to liquidate in December 2022, leading to $750 million in losses for sponsors.

However, the Treasury Department and the Internal Revenue Service surprised SPAC dealmakers and markets when they stated that liquidations wouldn't be subject to the new federal buyback taxes.

While the issue of buyback taxes is still unlikely to resolve the current sentiment for SPACs in the market, it will provide a short-term boost for dealmakers who are still hunting for deals. 

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Source: SPACs Get a Belated Tax Break