Tax free acquisition

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Tax free acquisition

A merger or consolidation in which (1) the acquirer's tax basis on each asset whose ownership is transferred in the transaction is generally the same as the acquiree's, and (2) each seller who receives only stock does not have to pay any tax on the gain realized until the shares are sold.

Tax Free Acquisition

A merger where the value of the assets a stockholder receives at the end of the transaction is substantially the same as the value of assets before the transaction began. For tax purposes, stockholders are treated as having kept their old shares, and are therefore not subject to capital gains taxes.
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It also comes as Entercom's stock has been bouncing between $9.85 and $11 since May 2017 -- well before the company closed on its tax-free acquisition of CBS Radio.
It is common for key employee shareholders to retain an interest in the target business following either a taxable or tax-free acquisition. In many cases, the key employees' stock is either converted into or exchanged for stock that vests over time based upon the shareholders' continued employment with the target or the acquirer.
* The tax-free acquisition of other accounting firms or their separately incorporated divisions; e.g., audit divisions or consulting divisions;
To effect a tax-free acquisition, at least two corporations must be involved, one of which may be formed specifically for that purpose.
During the conversation, the member explains how to structure the transaction so it will be a tax-free acquisition. This illustration's conclusion is that, even though oral advice may serve a taxpayer's needs appropriately in well-defined areas or routine matters, written communications are recommended in important, complicated or unusual transactions.
During the call, the member explains how the transaction should be structured so it will qualify as a tax-free acquisition.
81-70 gives a taxpayer alternatives for determining carryover tax basis in "B" reorganizations, the full scope of this revenue procedure may not have been fully appreciated until another form of tax-free acquisition fell under its jurisdiction.
(37) The final regulations provide no guidance, however, regarding the tax treatment of costs capitalized in connection with any tax-free acquisition, or the target's costs in a taxable stock acquisition.
However, in a tax-free acquisition or a deemed sale under Sec.
For example, spin-offs used to facilitate a taxable or tax-free acquisition, a public offering or simply to create an attractive structure to provide equity compensation to key employees of a particular business, could potentially cause corporate-level taxes.
Since the repeal of the General Utilities doctrine in 1986,(1)(*) one of the only ways in which corporations may distribute appreciated property to their shareholders without recognizing corporate-level gain is through the use of spin-off type transactions under section 355 of the Internal Revenue Code.(2) Often, corporations undertake such spinoffs to dispose of unwanted businesses in preparation for a tax-free acquisition by another corporation.