Company: GNOLF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001654954-25-004861
Chunk: 35

Company: GENOIL INC
Filing Date: 2025-04-30
Form: 20-F
Item: Item 10
Chunk 35
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's Shares

Dividends paid on Genoil's Common Shares held by a U. S. Holder of Common Shares will be subject to Canadian non-resident withholding tax. The Corporation is required to withhold taxes at source. Under the Treaty, a withholding rate of 5% is applicable to corporations resident in the United States and who are beneficial owners of at least 10% of the voting shares of the Corporation. Under the Treaty, a withholding rate of 15% is applicable in all other cases.

United States Federal Income Tax Consequences

The U. S. federal income tax consequences related to the disposition and ownership of Common Shares, subject to the Foreign Personal Holding Company Rules, Passive Foreign Investment Company and Controlled Foreign Corporation Rules contained in the Code, are generally as follows:

Disposition of Common Shares

On a disposition of Common Shares, a U. S. Holder of Common Shares generally will recognize a gain or loss. The gain or loss will be equal to the difference between the amount realized on the sale and the U. S. Holder of Common Share's adjusted tax basis in those shares. Any such gain or loss will be a long-term capital gain or loss if the shareholder has held the shares for more than one year. Otherwise the gain or loss will be a short-term capital gain or loss. However, a gain realized on the disposition of Common Shares may be treated as ordinary income if the company was a "collapsible corporation" within the meaning of the Code. The gain or loss will generally be a U. S. source gain or loss.

A collapsible corporation is usually formed to give a short-term venture the appearance of a long-term investment in order to portray income as capital gain rather than profit. Such a corporation is typically formed for the sole purpose of purchasing property and usually dissolved before the property has generated substantial income. The Internal Revenue Service treats the income earned through a collapsible corporation as ordinary income rather than as capital gain.

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Dividend Distributions on Shares

Dividend distributions (including constructive dividends) paid by Genoil will be required to be included in the income of a U. S. Holder of Common Shares to the extent of the Corporation's current or accumulated earnings and profits ("E& P") attributable to the distribution without reduction for any Canadian withholding tax withheld from such distributions. Even if such payment is in fact not converted to U. S. dollars, the amount of any cash distribution paid in Canadian dollars will be equal to the U. S. dollar value of the