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The Tax Plan Cometh? Here's What Will Happen if Yahoo Doesn't Cough Up an Alibaba Solution.

So what exactly does Wall Street want and want now?

You might not think that Yahoo’s fourth-quarter earnings make for riveting fare. But Wall Street’s anticipation of what the company will say by tomorrow about plans to deal with its $40 billion stake in China’s Alibaba is pretty much the most interesting thing to come along in a while regarding the Silicon Valley Internet giant.

Investors are certainly not expecting exciting new products. After all, besides the splashy refurbishment of a lot of old ones, there is very little that has been innovated at Yahoo over the last several years. No one is buying the stock with the assumption that the next Instagram is being invented there right now.

And they are also not particularly focused on goosing revenue. Most stockholders have largely been giving Yahoo’s leadership a pass here, as its execs have tried to stanch the dramatic falloff in advertising sales and find new growth — a valiant effort that so far has gained little traction.

Most of all, shareholders do not want to see some bold acquisition that points the way to the future. In fact, an increasing number have been pressuring Yahoo not to buy much of anything at all. No CNN! No Flipboard! No nothing! Instead, they want the company to hand back the money it has been gifted due to a canny, long-ago investment made by one of its co-founders.

So what exactly does Wall Street want and want now?

“The Street widely believes that [Yahoo will] announce a spin of Alibaba (not with Yahoo! Japan) and a small operating business into a separately traded company,” said Robert Peck, a managing director at SunTrust, echoing a common expectation. “This should be tax free.”

Tax free, in fact, is precisely what investors are demanding from CEO Marissa Mayer and CFO Ken Goldman. That’s because the massive windfall from Alibaba is taxed at a 35 percent rate, if there is nothing done — Yahoo has already paid $3 billion on a $10 billion portion of Alibaba it sold last year.

Goldman, in particular, has spent the last few months winking and nodding to shareholders that this is what will be delivered sometime before or at the time when earnings are announced. (Numerous Yahoo insiders said Mayer is much less sanguine about the move and, in fact, would like to keep all the money for a number of ambitious initiatives.)

Perhaps that is why the pair is taking it down to the wire — there are only 24 hours or so left, as the clock runs out to put that plan on the table outlining what Yahoo will do with its remaining stake in Alibaba.

To be clear, whatever is announced, if it is announced at all, cannot actually be done until October, which is when the lockup agreement from the Alibaba IPO ends. That includes the most likely tax technique Peck is referring to.

This move is called a Reverse Morris Trust, in which the core business of Yahoo is spun off, leaving behind the Alibaba investment, along with a small operating entity. While there are some dicey technicalities here — including how regulators look at a company that is essentially an investment vehicle — this is the plan most investors are expecting.

Among the risks of spinning off the Asian assets — which also include a large and lucrative stake in SoftBank’s Yahoo Japan — is that the market cap of the core Yahoo left behind is considerably smaller. That, in turn, makes it an easier swallow for a strategic buyer or a private equity firm.

“Right now the Asian stakes are acting like a poison pill for Yahoo,” said one investor who has looked into taking Yahoo private. “Once those go away, the company does not have those built-in protections.”

There are other options too, but what cannot happen, said the panoply of investors I spoke to, is lack of clarity on the issue from Yahoo. If the typically fastidious Mayer is not clear, most agreed that there will be a lot of trouble for the company, which is already suffering a mounting level of shareholder dissatisfaction, despite a very high stock price.

“They have to show an intention to do something, even if they do not have to spin the whole 12 percent of the asset,” said one major investor. “It will be hard to balance the tax pressure with keeping an ability to invest for the future, but that is the eye of the needle Mayer has to slip through.”

Intention to act, said many, should be enough to satisfy investors and, perhaps more importantly, stave off a proxy fight from activist shareholder Starboard Value. As most know, the investment firm has been been publicly pressuring Mayer to turn over the dough and perhaps also make some kind of grand gesture like purchasing AOL.

“There are a lot of anxious hedge funds worried she won’t announce anything or only give an ‘update without any final plan/decision,'” said Eric Jackson, an investor who has turned into a vocal critic of Mayer of late. “I worry too, but I think she will announce a spinoff of the core business from the Alibaba stake.”

Jackson said that if Mayer announces something, the stock should go up.

What comes after that, though, is perhaps the hard question. Without its rich Asian stake, Mayer has some really heavy lifting at Yahoo, despite all her onerous efforts so far.

“Longer term, beyond 2015, I think she’s looking at a real difficult time turning around the core. Maybe she can win the iPhone deal this year and pull some other levers to make search and display revenue look like it’s growing,” said Jackson, referring to Yahoo acing out Google for Apple’s mobile search business. “Going into 2016, though, I think it’s going to be a lot tougher and she’d be smart to sell the core biz before that.”

Like I said, riveting.

This article originally appeared on Recode.net.