Company: CGCT
Filing Date: 2025-03-05
Form Type: S-1/A
Source: 0001104659-25-020969
Chunk: 305

Company: Cartesian Growth Corp III
Filing Date: 2025-03-05
Form: S-1/A
Chunk 305
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 reporting requirements with respect to a redemption
of Class A ordinary shares, and such holders are urged to consult with their own tax advisors with respect to their reporting requirements.

Exercise, Lapse or Redemption of a Warrant

A U.S. Holder generally will not recognize
gain or loss upon the acquisition of a Class A ordinary share upon the exercise of a warrant for cash. A U.S. Holder’s
tax basis in a Class A ordinary share received upon exercise of the warrant generally will equal the sum of the U.S. Holder’s
initial investment in the warrant (that is, the portion of the U.S. Holder’s purchase price for the units that is allocated
to the warrant, as described above under “— Allocation of Purchase Price and Characterization of a Unit”)
and the exercise price. It is unclear whether a U.S. Holder’s holding period for the Class A ordinary share received
will commence on the date 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