Company: CGCT
Filing Date: 2025-03-21
Form Type: S-1/A
Source: 0001104659-25-026623
Chunk: 312

Company: Cartesian Growth Corp III
Filing Date: 2025-03-21
Form: S-1/A
Chunk 312
---
 of exercise of the warrant or the day following the date of exercise of the warrant; in either case, the
holding period will not include the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised,
a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.

The tax consequences of a cashless exercise of
a warrant are not clear under current law. Subject to the PFIC rules discussed below, a cashless exercise may not be taxable, either
because the exercise is not a realization event or because the exercise is treated as a recapitalization for United States federal
income tax purposes. In either situation, a U.S. Holder’s tax basis in the Class A ordinary shares received generally
should equal the U.S. Holder’s tax basis in the warrants exercised therefor. If the cashless exercise was not a realization
event, it is unclear whether a U.S. Holder’s holding period for the Class A ordinary shares received would be treated
as commencing on the date of exercise of the warrants or the day following the date of exercise of the warrants; in either case,
the holding period will not include the period during which the U.S. Holder held the warrants. If the cashless exercise were treated
as a recapitalization, the holding period of the Class A ordinary shares received would include the holding period of the warrants.

It is also possible that a cashless exercise
could be treated in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. Holder could be
deemed to have surrendered a number of warrants equal to the number of Class A ordinary shares having an aggregate value equal to
the exercise price for the total number of warrants to be exercised. In such case, subject to the PFIC rules discussed below, the
U.S. Holder would recognize capital gain or loss with respect to the warrants deemed surrendered in an amount equal to the difference
between the fair market value of the Class A ordinary shares that would have been received in a regular exercise of the warrants
deemed surrendered and the U.S. Holder’s tax basis in the warrants deemed surrendered. In this case, a U.S. Holder’s
aggregate tax basis in the Class A ordinary shares received would equal the sum of the U.S. Holder’s initial investment
in the warrants deemed exercised (i.e., the portion of the U.S. Holder’s purchase price for the units