When Does a Redemption Qualify as a Not Essentially Equivalent

question 24

Essay

When does a redemption qualify as a not essentially equivalent redemption under § 302(b)(1)?

---

Definitions:

Incremental Costs

The additional costs incurred if a company increases its production or level of operations.

Direct Materials

Raw materials directly used in the production of goods, easily traceable to the product being manufactured.

Operating Income

The profit realized from a business's core operations after deducting operating expenses such as wages and cost of goods sold, but before taxes and interest.

Direct Labor

The cost of wages for those workers directly involved in the production of goods or services, not including support staff.