What were the tax implications of the separation of CarMax from Circuit City?

Circuit City obtained a ruling from the U.S. Internal Revenue Service stating that the redemption and distribution of CarMax, Inc. stock qualified as a tax-free transaction for U.S. federal income tax purposes. Accordingly, Circuit City Group and CarMax Group shareholders did not recognize any gain or loss on the redemption or distribution of CarMax stock, except in connection with cash received in lieu of a fractional share of CarMax stock. Tax Implications for CarMax Group Holders. Holders of CarMax Group common stock whose shares were redeemed in exchange for CarMax, Inc. common stock have a tax basis in the CarMax, Inc. shares equal to their aggregate tax basis in the CarMax Group shares. A PDF version of the letter mailed after the separation date to all CarMax shareholders is available. This letter contains further details on the income tax consequences of the separation for CarMax shareholders. Tax Implications for Circuit City Group Holders. Holders of Circuit City Group ...  more