How to acquire a company - and retain its management
Article Abstract:
Section 338 of the tax code stipulates that the purchase of 80% or more of a corporation's stock may be treated by election as a sale of assets. This option is useful when a direct sale of assets is more preferable for tax purposes. This strategy can be used when the target corporation is a subsidiary of another US corporation or has been an S corporation for at least 10 years. However, US corporations and foreign corporations doing business in the US do not find Section 338 to be useful. A 'qualified stock purchase' under Section 338 election of at least 80% of the value and voting power of the target corporation's stock must be made within a 12-month period by the purchaser.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Speed up the deduction of business expansion costs
Article Abstract:
Businesses with acquisition plans must meet the requirements for tax deductions under Section 195 of the tax code. They are then required to furnish a statement to the tax return as provided in the regulations after complying with the code requirements. The statement should be filed early so that it can be amended while a late filing results in the loss of opportunity for amortization. For businesses with expansion plans, the expansion costs are not automatically deductible. They should be able to prove that they did not create a separate organization or generate a significant future benefit to qualify for a tax deduction.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
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