RSM424H1 Lecture Notes - Lecture 7: Double Taxation
Document Summary
18 business acquisitions & divestitures (assets vs. shares) Asset sale (assume company is wound up after asset sale) Buyer: gets bump up to ucc of drive tcg/recapture assets. Sellers prefer lower proceeds to recognize less cg/recapture. Double taxation: take out money after sale as dividend trigger personal tax: does the gain qualify for capital gains exemption, simpler relative to asset sale. Buyers prefer asset sale (see share sale explanation: acquisition of control (recognize unrealized losses, unknown liabilities (e. g. lawsuits, tax reassessments) The older a company is, the less likely a buyer is to purchase it. In reality, to satisfy both parties, the best outcome would involve a hybrid sale won"t need to know tax consequences for this course. Components of a share sale in-class example. Corporations do not get capital gains exemption, only for individuals. Applies to capital gains realized on the disposition of qualifying small business corporation .
