Incredimail 2014 Annual Report Download - page 84

In addition, a U.S. Holder generally must hold its ordinary shares for at least 61 days during the 121-
day period beginning on the date
that is 60 days prior to the ex-
dividend date with respect to such dividend, excluding for this purpose, under the rules of Code section 246(c), any
period during which the U.S. Holder has an option to sell, is under a contractual obligation to sell, has made and not closed a short sale of, is the
grantor of a deep-in-the-
money or otherwise nonqualified option to buy, or has otherwise diminished its risk of loss by holding other positions
with respect to, such ordinary share (or substantially identical securities) or (2) the U.S. Holder is under an obligation (pursuant to a short sale or
otherwise) to make related payments with respect to positions in property substantially similar or related to the ordinary share with respect to
which the dividend is paid.
In addition, a non-
corporate U.S. Holder will be able to take a qualified dividend into account in determining its deductible investment
interest (which is generally limited to its net investment income) only if it elects to do so; in such case the dividend will be taxed at ordinary
income tax rates. Dividends paid by a non-
U.S. corporation will not be qualified dividend income and thus, not qualify for reduced rates, if such
corporation is, for the tax year in which the dividend is paid or the preceding tax year, a "passive foreign investment company" for U.S. federal
income tax purposes.
Subject to certain conditions and limitations, non-
U.S. income tax as withheld on dividends may be deducted from taxable income or
credited against a U.S. Holder’
s U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. Dividends paid by us generally will be foreign source "passive income" for U.S. foreign tax credit
purposes. U.S. Holders that do not elect to claim a foreign tax credit may generally instead claim a deduction for the non-
U.S. income taxes
withheld if such U.S. Holders itemize their deductions for U.S. federal income tax purposes. The rules relating to the determination of foreign
source income and the foreign tax credit are complex, and the availability of a foreign tax credit depends on numerous factors. U.S. holders
should consult their tax advisors regarding the application of the foreign tax credit rules.
A U.S. holder will be denied a foreign tax credit for non-
U.S. income taxes withheld from a dividend received on the ordinary shares (i)
if the U.S. holder has not held the ordinary shares for at least 16 days of the 31-day period beginning on the date which is 15 days before the ex-
dividend date with respect to such dividend or (ii) to the extent the U.S. holder is under an obligation (whether pursuant to a short sale or
otherwise) to make related payments with respect to positions in substantially similar or related property. Any days during which a U.S. holder
has substantially diminished its risk of loss on the ordinary shares are not counted toward meeting the required 16-day holding period.
Disposition of Ordinary Shares
Upon the sale or other disposition of ordinary shares (other than with respect to certain non-
recognition transactions), subject to the
discussion below under "Passive Foreign Investment Company Considerations," a U.S. Holder generally will recognize capital gain or loss equal
to the difference between the amount realized on the disposition and the holder’
s adjusted tax basis in the ordinary shares. Gain or loss upon the
disposition of the ordinary shares will be treated as long-
term if, at the time of the sale or disposition, the ordinary shares were held for more
than one year. Long-term capital gains realized by non-
corporate U.S. Holders generally are subject to reduced rates of tax (currently, a
maximum rate of 20% applies). The deductibility of capital losses by a U.S. Holder is subject to limitations.
A U.S. holder that uses the cash method of accounting calculates the dollar value of the proceeds received on the sale as of the date that
the sale settles. However, a U.S. holder that uses the accrual method of accounting is required to calculate the value of the proceeds of the sale as
of the trade date and may
therefore realize foreign currency gain or loss between the trade date and the settlement date. A U.S. holder may avoid
realizing foreign currency gain or loss by electing to use the settlement date to determine the proceeds of sale for purposes of calculating the
foreign currency gain or loss. In addition, a U.S. holder that receives foreign currency upon disposition of ordinary shares and converts the
foreign currency into dollars after the settlement date or trade date (whichever date the U.S. holder is required to use to calculate the value of the
proceeds of sale) may have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against
the dollar, which will generally be U.S. source ordinary income or loss.
(b)
that corporation is eligible for the benefits of a comprehensive income tax treaty with the United States which includes an
information exchange program and is determined to be satisfactory by the United States Secretary of the Treasury. The Internal
Revenue Service has determined that the United States
-
Israel Tax Treaty is satisfactory for this purpose.
78