Lecture 8

Lecture 8 - • Tax considerations in transaction are...

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Unformatted text preview: • Tax considerations in transaction are important in knowing why a deal is done one way or another. • To structure a transaction ask what is the legal form pass through entity? -Partnership, S corp., C corp. subsidiary of another corp. -it has income -Income is passed through to the owner (taxed once to the owner). -Profit on sale is taxed to partner not partnership • 1986: There is double taxation • C Corps: If there is an income, it is subject to operational tax. Then, if it goes to shareholders, they are taxed as well. • • According to Badge: there is asset acquisition, stock acquisition, and merger. But, Martin thinks there are only 2 kinds: asset acquisition and stock acquisition. When smoke clears, target has disappeared, and buyer has all of the assets. • discussed forward triangular mergers • taxable transactions • What are tax objective’s of partners • Buyer’s objective: acquire assets of a target company with the most beneficial tax attributes as possible. • If NBV < fair value, then buyer wants to take it with a stepped-up basis so they can claim tax on this basis • Tax sheltered cash discussion...
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This note was uploaded on 04/04/2012 for the course FIN 400 taught by Professor Kedia during the Spring '12 term at Rutgers.

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Lecture 8 - • Tax considerations in transaction are...

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