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Subject:  Re-incorporation to Bermuda Questions Date:  2/20/2002  5:00 PM
Author:  AEP Number:  59159 of 123001

To the more experienced folks-

I recently discovered that Stanley Works (SWK) is planning to change its' corporation status from the US to Bermuda, pending shareholder approval. (No current SWK board on the fool)

Today's Hartford Courant newspaper (2/20/2002), Business Section ran an article about this prospect and noted some interesting issues that such a change could bring about for the company's shareholders.

1. The stock change over (SWK is suppose to exchange on a 1 for 1 basis) could lead some shareholders into a capital gain or loss situation for shares held in taxiable accts, depending on their basis.

2. The article also pointed out that the (US) Federal tax law imposes a one-time charge (known as a "Toll Charge") on such re-incorporation moves. The amount of the Toll Charge is based on how much the stock has appreciated since it was purchased by the shareholders. The newspaper article states that "the Toll Charge is paid by the shareholders and based on the capital gains, if any, from the time they purchased the company's stock."

Q1 Is it therefore true that the stockholder incurrs two finanical hits at the time of the re-incorporation stock exchange: (assuming a gain has occurred) - A capital gain tax, and the Toll Charge?

Q2. Are there any other negative