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Corporate Reorganizations: Simple as A B C! by Herbert M, Paul New York Business management is often faced with the problem of whether or not to combine with another corporation which is in a similar, related or complementary field. In today's business climate it is becoming increasingly common for corporations to combine. The audit staff, while not responsible for the tax planning concerning a combination of businesses, should nevertheless be familiar with the various tax problems involved. This article will acquaint the staff man who is not a specialist in taxes with the various basic methods employed and principles involved in such combinations. The decision to combine one business entity with another is a management decision which involves business considerations. As with many other phases of business, however, the tax consequences are vitally important if not decisive. For our purposes we shall distinguish and consider two classes of combinations: taxable and tax free. A taxable combination is essentially the purchase of a business entity. For tax purposes this form of combining is considered as a completed and closed transaction. Thus the entire gain is considered as earned in the year of the transaction. The gain recognized is the difference between the tax basis of the property sold and the consideration received. As you can see, the taxable combination is treated the same as'a purchase by one individual of stock owned by another. Frequently the value of a company about to be combined with another has grown so large that tax on the gain involved in a taxable combination would be prohibitive. Accordingly, the usual form of JUNE I960 9
Object Description
Title |
Corporate reorganizations: Simple as A B C! |
Author |
Paul, Herbert M. |
Subject |
Corporate reorganizations -- Taxation -- United States |
Personal Name |
Paul, Herbert M. |
Portrait |
Paul, Herbert M. |
Office/Department |
Touche, Ross, Bailey & Smart. New York Office |
Citation |
Quarterly, Vol. 06, no. 2 (1960, June), p. 09-16 |
Date-Issued | 1960 |
Source | Originally published by: Touche, Ross, Bailey & Smart |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF image with OCR under text, scanned at 400dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi. Digital Accounting Collection |
Date-Digitally Created | 2009 |
Language | eng |
Identifier | Quarterly_1960_June-p9-16 |