session18(14页).pdfVIP

Session 18 - Corporate Reorganizations �Why reorganize? �Do I acquire stock or assets? �Is the transaction taxable or tax-deferred 15.518 Fall 2002 Session 18 Reasons for reorganizations �Improve economic efficiency • Vertical or horizontal integration • Economies of scale and / or scope • Exploit asymmetric information • Enter new lines of business (diversify) • Exit business �Extend managerial power �Transfer wealth 15.518 Fall 2002 Session 18 Nontax issues �Financial reporting effects �Transaction costs �Contingent liabilities �Control issues �Political / regulatory costs �What consideration do I have to offer? 15.518 Fall 2002 Session 18 Tax issues �Seller • Will a tax be owed by selling firm? • Will tax be owed by selling firm’s shareholders? �Buyer • What will the basis in the target’s assets be? • What will happen to the tax attributes of the target? �Both • What effect will the financing choice have? 15.518 Fall 2002 Session 18 Key IRC sections � §368 Definitions related