Tax Accounting in Mergers and Acquisitions, 2021 Edition (U.S.)

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Author: Glenn R. Carrington

There are many considerations that influence how a transaction
is structured, including tax considerations. The most basic tax
issue is whether to structure the transaction as taxable or taxfree.
In general, there are four basic structures for a corporate
acquisition: (1) a taxable acquisition of a target corporation’s
stock; (2) a taxable acquisition of a target corporation’s assets;
(3) a tax-free acquisition of the target corporation’s stock; or (4)
a tax-free acquisition of a target corporation’s assets.

While at first blush, it may seem that it is always more desirable
to structure a transaction as tax-free, this is not always the
case. As an initial matter, the requirements for structuring a
transaction as a tax-free reorganization, which are set forth
in § 368, are quite strict. The strictures imposed by § 368
may not always be compatible with the business objectives
of the parties to the transactions, making resort to a taxable
structure more desirable. If the fair market value of a target
corporation’s assets is greater than the target’s basis in such
assets, the purchaser may wish to acquire a fair market value
basis (i.e., a stepped up basis) in such assets, something that is
only possible in a taxable asset acquisition or a taxable stock
acquisition for which a § 338 election is made.

This book gives in-depth, practical coverage of today’s key issues
in corporate acquisitions, dispositions, reorganizations, and
restructurings from a transactional perspective. It will help you:
1. Decide if the transaction should be taxable or nontaxable.
2. Structure the deal for the best results—stock or
asset acquisition.
3. Achieve desired business objectives.

This book considers the tax accounting implications of structuring
and restructuring transactions including those described in Code §§
• 351 (Transfer to Corporation Controlled by Transferor),
• 338 (Certain Stock Purchases Treated as Asset Acquisitions),
• 381 (Carryovers in Certain Corporate Acquisitions),
• 721 (Nonrecognition of Gain or Loss on Contributions to a
Partnership), and
• 1001 (Gain or Loss on Disposition of Property).

It discusses the rules relative to a taxpayer’s ability to carry over
methods of accounting, to obtain audit protection through filing
accounting method changes, to preserve favorable methods of
accounting, to determine the effect of the transaction on any
unamortized Code §481(a) adjustments (Adjustments Required
by Changes in Accounting Methods), and to use the chosen
structure as a means of achieving appropriate tax accounting
objectives. In addition, it describes some of the most common
types of accounting method exposure items that arise during
the course of due diligence and some of the alternatives for
mitigating exposure to the buyer. Furthermore, it describes the
most significant anti-abuse rules that prevent taxpayers from
unreasonably taking advantage of these provisions. Finally, it
addresses some of the pitfalls that taxpayers should take into
account in structuring transactions.

Chapter 1 Taxable and Tax-Free Acquisitions
Chapter 2 Basic Concepts in Deductibility and Capitalization
Chapter 3 Accounting for Restructuring Transactions under
Code §§351, 338, 381, 721, and 1001
Chapter 4 Treatment of Contingent Liabilities
Chapter 5 Treatment of Transaction Costs Prior to the Final
Capitalization Regulations
Chapter 6 Final Capitalization Regulations
Chapter 7 Debt Modifications in Connection
Chapter 8 Original Issue Discount (OID) in Mergers
and Acquisitions
Chapter 9 Amortization of Intangibles under Code §197
Chapter 10 Limitation on Loss Carrybacks - Corporate Equity
Reduction Transactions
Chapter 11 Consolidated Return Tax Accounting Issues
Chapter 12 Tax Accounting Issues in Bankruptcies
and Work-outs

Nov 30, 2020 1,090 Pages 9780808054962

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