The acquisition of shares by an individual though, is a transaction in securities and, in these circumstances, the individual(s) receive an income tax advantage in connection with it.
What income tax advantage do they receive, over and above any advantage they already have being the exact same shareholders as they were of the holding company?
I do not see how they will not pay tax on any transfer of the subsidiary's shares that they do not give full value for.
Standing back and looking at the whole I see one asset (the shares in the holding company) being swapped for other assets (shares in the subsidiary and shares in the holding company).
The value of the shares in the holding company will fall by exactly the same anount as the value of the subsidiary shares. There is no overall change in ownership or control.
We end up with no overall gain or loss and nothing has been realised in terms of cash (at this stage).
So why a tax bill?
johngroganjga wrote:
Their best bet is to take them as a distribution in specie (if the liquidator is onside with that) in the liquidation.
Liquidator onside but a dividend in specie in a full liquidation will be very very expensive, the subsidiary is also cash rich and profitable.
johngroganjga wrote:
Have you thought about the corporation tax position of the holding company on its disposal of the subsidiary?
My answers
Pity the back button still doesn't take you back to where you were before though. More backwards than back.
This post needs more love
+1
Yup, do what most of us are doing....
stop visiting this website
(just checking in for the [***])
The only reason for logging on now is to catch up on all the [***] about the new site.
.
Yes it is
But your're not though
So
If we don't liquidate the holding company afterwards there is no advanage. Is there?
What advantage ?
What income tax advantage do they receive, over and above any advantage they already have being the exact same shareholders as they were of the holding company?
Other options ?
Standing back and looking at the whole I see one asset (the shares in the holding company) being swapped for other assets (shares in the subsidiary and shares in the holding company).
The value of the shares in the holding company will fall by exactly the same anount as the value of the subsidiary shares. There is no overall change in ownership or control.
We end up with no overall gain or loss and nothing has been realised in terms of cash (at this stage).
So why a tax bill?
Liquidator onside but a dividend in specie in a full liquidation will be very very expensive, the subsidiary is also cash rich and profitable.
Substantial Shareholder Exemption?