《税收概述》（英文版） Chapter 7 Corporate Acquisitions

lllll ap ingrate Cor ter i Acquisitions a Reorganization在s

1 Chapter 7: Corporate Acquisitions and Reorganizations

CORP ACQUISITIONS REORGANIZATIONS (1 of 2) Taxable acquisition transactions Taxable vs tax-free acquisitions Tax consequences of reorganizations Acquisitive reorganizations Devisive reorganizations

2 CORP ACQUISITIONS & REORGANIZATIONS (1 of 2) Taxable acquisition transactions Taxable vs. tax-free acquisitions Tax consequences of reorganizations Acquisitive reorganizations Devisive reorganizations

CORP ACQUISITIONS REORGANIZATIONS (2 of 2) Other reorganization transactions Judicial restrictions on reorganizations Tax attributes Limitation on use of tax attributes Example 3

3 CORP ACQUISITIONS & REORGANIZATIONS (2 of 2) Other reorganization transactions Judicial restrictions on reorganizations Tax attributes Limitation on use of tax attributes Example

Taxable Acquisition Transactions Asset acquisitions Stock acquisitions w/ no liquidation Stock acquisitions w/ liquidation Stock acquisitions w/ deemed liquidation

4 Taxable Acquisition Transactions Asset acquisitions Stock acquisitions w/ no liquidation Stock acquisitions w/ liquidation Stock acquisitions w/ deemed liquidation

Asset Acquisitions Direct purchase of assets Target corporation Gain or loss and depreciation recapture are computed by selling corporation on each asset Acquiring corporation Basis in assets is acquisition cost 5

5 Asset Acquisitions Direct purchase of assets Target corporation –Gain or loss and depreciation recapture are computed by selling corporation on each asset Acquiring corporation –Basis in assets is acquisition cost

Stock Acquisitions with No Liquidation (1 of 2) How acquisition is accomplished Shareholders of target corp sell their shares directly to purchaser corp arget corp recognizes no gain/loss Target corp s/hs recognize gain/loss Payment to a s/h for a noncompete agreement is ordinary income to s/h 6

6 Stock Acquisitions with No Liquidation (1 of 2) How acquisition is accomplished –Shareholders of target corp sell their shares directly to purchaser corp Target corp recognizes no gain/loss Target corp s/hs recognize gain/loss –Payment to a s/h for a noncompete agreement is ordinary income to s/h

Stock Acquisitions with No Liquidation (2 of 2) Purchaser corp consequences Purchaser has a new subsidiary Basis in target stock is acquisition cost >Purchasers basis in targets stock (outside basis) may be >targets basis in its assets No adjustment to basis of targets assets Tax attributes of target transfer to purchaser

7 Stock Acquisitions with No Liquidation (2 of 2) Purchaser corp consequences –Purchaser has a new subsidiary –Basis in target stock is acquisition cost »Purchaser’s basis in target’s stock (outside basis) may be > target’s basis in its assets –No adjustment to basis of target’s assets Tax attributes of target transfer to purchaser

Stock Acquisitions with Liquidation If parent owns at least 80% of new subsidiary, liquidation is tax-free as described in Chapter 6 Premium paid(amount above target corp's basis in its assets)is lost upon liquidation of the subsidiary 8

8 Stock Acquisitions with Liquidation If parent owns at least 80% of new subsidiary, liquidation is tax-free as described in Chapter 6 Premium paid (amount above target corp’s basis in its assets) is lost upon liquidation of the subsidiary

Stock Acquisitions with Deemed Liquidation (1 of 2) How acquisition is accomplished Shareholders of target corp sell their shares directly to purchaser corp Purchaser files 8 338 election pretending that target has been liquidated and a new subsidiary created in its place 9

9 Stock Acquisitions with Deemed Liquidation (1 of 2) How acquisition is accomplished –Shareholders of target corp sell their shares directly to purchaser corp –Purchaser files §338 election pretending that target has been liquidated and a new subsidiary created in its place

Stock Acquisitions with Deemed Liquidation (2 of 2) Target corp recognizes losses on pretend sale of assets to itself Subject to depreciation recapture Target corp's basis in its assets are stepped up(or down Targets old tax attributes wiped out New elections are made 10

10 Stock Acquisitions with Deemed Liquidation (2 of 2) Target corp recognizes & losses on “pretend” sale of assets to itself –Subject to depreciation recapture Target corp’s basis in its assets are stepped up (or down) Target’s old tax attributes wiped out –New elections are made