Tax-freeacquisitions(英文版)(pdf26页)分析.pdf

Session 20 - Tax-free acquisitions �For tax purposes, a reorganization is a transaction in which one corporation acquires the stock or assets of another corporation �Similar to taxable acquisitions discussed previously except that in a reorganization the consideration used by the acquiring corporation is its own stock (or the stock of its parent) �Generally transactions meeting the definition of a reorganization are not taxable 15.518 Fall 2002 Session 20 Tax-free acquisitions �Why are these allowed? • Shareholders are not cashing out, rather they are maintaining their same investment in the underlying assets, but in a different corporate form • However, in many situations going through a reorganization can be the next best thing to cashing out, but without the tax cost 15.518 Fall 2002 Session 20 An example �You start your own business, organize it as a corporation, operate it for several years, iit becomes quite profitable �Microsoft decides that they would like to acquire your business, and make you an offer you cant refuse �Your corporation is merged into a subsidiary of Microsoft • you turn in your old shares and receive in exchange 1,000,000 shares of Microsoft common stock �Even though owning Microsoft stock is almost as good as owning cash, this transaction is not taxable, you are only taxed if you sell the Microsoft stock in the future 15.518 Fall 20