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SEC Filings
424B5
APOLLO COMMERCIAL REAL ESTATE FINANCE, INC. filed this Form 424B5 on 11/08/2017
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deductible in an accrual period may be carried forward to the next accrual period and treated as bond premium allocable to that period.

Sale, Exchange, Redemption or Repurchase of the Notes

Except as provided below under “—Conversion of the Notes,” a U.S. Holder will generally recognize gain or loss upon the sale, exchange, redemption, repurchase or other taxable disposition of a note equal to the difference (if any) between the amount of cash and the fair market value of property received in exchange therefor (other than amounts attributable to accrued but unpaid stated interest (excluding amounts in respect of pre-issuance accrued interest treated as a return of capital), which, if not previously taxed, will be taxable as ordinary interest income) and a U.S Holder’s adjusted tax basis in the note. A U.S. Holder’s adjusted tax basis in a note generally will equal the cost of the note to such U.S. Holder, decreased by (i) any amount attributable to pre-issuance accrued interest that has already been paid to the U.S. Holder, and (ii) any amortizable bond premium taken with respect to such note. Capital gain or loss recognized upon the disposition of a note will be a long-term capital gain or loss if the note was held for more than one year. The maximum tax rate on long-term capital gains to non-corporate U.S. Holders is generally 20%. The deductibility of capital losses is subject to limitations.

Conversion of the Notes

If a U.S. Holder receives solely cash in exchange for the notes upon conversion, the U.S. Holder’s gain or loss will be determined in the same manner as if the U.S. Holder disposed of the notes in a taxable disposition (as described above under “—Sale, Exchange, Redemption or Repurchase of the Notes”).

If we elect to settle a conversion solely in shares of our common stock, a U.S. Holder of a note will not recognize any income, gain or loss except to the extent of cash received in lieu of a fractional share of common stock (as described below), and except that the fair market value of common stock received with respect to accrued interest will be taxable as such (as described above under “—Interest on the Notes”). The tax basis of the shares of common stock received upon such a conversion (including any fractional share for which cash is paid but excluding common stock received with respect to accrued interest) will equal the adjusted tax basis of the note that was converted. A U.S. Holder’s holding period for shares of common stock received upon such a conversion (other than shares attributable to accrued and unpaid interest) will include the period during which the U.S. Holder held the notes.

If a combination of cash and common stock is received in exchange for a U.S. Holder’s notes upon conversion, we intend to take the position that the conversion should be treated as a “recapitalization” for U.S. federal income tax purposes. Under this treatment, the U.S. Holder will not recognize any loss, but will be required to recognize any gain. The amount of gain recognized by a U.S. Holder will equal the lesser of (i) the excess (if any) of (A) the amount of cash received (excluding any cash received in lieu of a fractional share of common stock and any cash received attributable to accrued and unpaid interest, which would be treated as described below) plus the fair market value of common stock received (treating a fractional share of common stock as issued and received for this purpose and excluding any such common stock that is attributable to accrued and unpaid interest) upon conversion over (B) the U.S. Holder’s tax basis in the converted note and (ii) the amount of cash received upon conversion (other than any cash received in lieu of a fractional share of common stock and any cash received attributable to accrued and unpaid interest). The gain recognized by a U.S. Holder upon conversion of a note will be capital gain, and will be long-term capital gain if the U.S. Holder’s holding period in the note was more than one year at the time of conversion. Long-term capital gains of non-corporate taxpayers are subject to reduced U.S. federal income tax rates. The U.S. Holder’s tax basis in the common stock received (including any fractional share for which cash is paid, but excluding shares attributable to accrued and unpaid interest) will equal the tax basis of the converted note, decreased by the amount of cash received (other than cash in lieu of a fractional share of common stock and any cash attributable to accrued and unpaid interest), and increased by the amount of gain (if any) recognized upon conversion (other than any gain recognized as a

 

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