RSM424H1 Lecture Notes - Lecture 19: Tax Deferral, Lesse, Issued Shares
Document Summary
Tax-deferred sales and acquisitions: the nature of and reasons for a tax-deferred sale, distinguished from a taxable sale by the nature of the payment received for the property: A taxable sale involves the payment of cash, or a deferred payment of cash secured by notes bearing interest. A tax-deferred sale involves payment in the form of shares issued by the purchasing corporation: a. The nature of and reasons for a tax-deferred sale perhaps no other acceptable buyers are present. Sale of assets: tax deferred if sell price = tax costs, can be done even though the actual selling price for legal purposes is equal to the assets" fmv. Sell at fmv for legal purposes; at tax values for tax purposes. Vendor can be paid in cash or notes to a maximum of cost (the elected amount) Balance is in form of shares: corporate structure - prior to acquisition, corporate structure after acquisition of assets.
