Why Would an Acquiring Corporation Want an Acquisition to Be

question 85

Essay

Why would an acquiring corporation want an acquisition to be tax-free if it gets only a substituted basis rather than a step-up basis for the acquired assets?

---

Definitions:

Stock Dividend

A dividend payment made to shareholders in the form of additional shares rather than cash.

Investment

Investment is the allocation of resources, usually money, in the expectation of generating an income or profit, such as purchasing securities or assets.

Parent's Books

The financial records held by a parent company that include accounts and transactions of its subsidiaries.

Noncontrolling Interest

A stake in a company that is not large enough to control or dictate the company's business operations, often reflected as a separate equity item in the consolidated financial statements.