How can I determine the appropriate tax treatment for the special dividend of $9 per share that was paid on January 8, 2008?
Forty-five cents per share of the distribution is taxable as “qualified dividend income.” The remaining portion of the distribution, or $8.55 per share, is treated first as a tax-free return of capital to the extent of each shareholder’s tax basis in his, her or its shares of InfoSpace common stock, and then as capital gain. The breakout of the distribution into the portion that is treated as qualified dividend income and the nondividend portion will be reported to shareholders on a tax information return in early 2009. Non-United States holders of InfoSpace common stock generally were subject to withholding on the gross amount of the distribution at a rate of 30% or such lower rate as may be permitted by an applicable income tax treaty. Because individual tax circumstances of shareholders vary, shareholders should consult their own tax advisors regarding the tax consequences to them of the distribution. Please note that InfoSpace’s determination of the portion of the distribution that
