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Group Restructuring

Tax and Accounting treatment in Group Restructuring

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Group Structure

A Ltd : Holding company

B Ltd, C Ltd and D Ltd  : Subsidiary companies (100% owned by A Ltd)

B Ltd and C Ltd merge in D Ltd.

Questions,

1.What will be the tax implication in this case for transferring assets and liabilities of B Ltd and C Ltd in to D Ltd?

2. What will the accounting treatment for investment values of B Ltd and C Ltd in books of A Ltd.?

 

 

Replies (6)

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By lesley.barnes
20th Oct 2021 10:20

Is this an real life scenerio or an exam question?

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Replying to lesley.barnes:
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By ShalinShah
20th Oct 2021 10:31

Its a case study to understand treatment

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Replying to ShalinShah:
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By lesley.barnes
20th Oct 2021 10:54

People on here are helpful to students but could you please post your conclusions based on your own research first so people can comment on it and offer guidence?

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Replying to lesley.barnes:
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By ShalinShah
20th Oct 2021 10:56

Thanks for you message

So As per my research

there will no capital gain tax liability as it is internal restructuring and loss b/fwd and capital allowance pool will be transferred to D Ltd.

Investment in A Limited for B Ltd and C Ltd will be transferred to D Ltd and the fair market value

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Replying to ShalinShah:
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By Leywood
20th Oct 2021 12:54

What would your tutor say if you handed in this response?

A little (more) effort goes a long way.

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By Leywood
20th Oct 2021 10:26

Homework?

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