There Are a Number of Key Tax Effects That Must

question 5

Essay

There are a number of key tax effects that must be considered during a business divestiture and acquisition, from the perspectives of both the vendor and the purchaser.
Required:
Match the following tax considerations with the most appropriate answer from the list below.Use each answer only once.
Tax consideration:
A.A change in control will restrict the use of losses._____
B.Capital gains and business income may occur in the business, reducing the after-tax proceeds._____
C.The capital gain deduction may apply._____
D.The cost base for assets is based on their market value._____
1) A key tax consideration for the sale of shares from the vendor's perspective.
2) A key tax consideration for the sale of assets from the vendor's perspective.
3) A key tax consideration for the purchase of assets from the purchaser's perspective.
4) A key tax consideration for the purchase of shares from the purchaser's perspective.

---

Definitions:

Consumer Expenditures

The total amount of money spent by consumers on goods and services in a specified period.

Proportion

Proportion refers to the relative relationship in size, amount, or degree between two or more things, often expressed as a ratio or fraction.

Discretionary Income

What remains of someone's earnings for savings, investment, or other expenses after settling tax obligations and necessary personal expenses like shelter and food.

Property Taxes

Taxes levied by local government on real property (land and buildings), based on assessed value, to fund municipal services like schools, roads, and public works.