Taxation of liquidating distributions
Factors which could have a material adverse effect on HTA's operations and future prospects include, but are not limited to: Forward-looking statements speak only as of the date made.
If the subsidiary was purchased in a non-taxable transaction, the parent's outside basis in the subsidiary's stock will equal the seller's basis, adjusted for the parent's interest in subsequent taxable income earned by the subsidiary and distributions made by the subsidiary to the parent.
Tax basis is the carrying cost of an asset on a company's tax balance sheet, and is analogous to book value on a company's accounting balance sheet.
In most cases, assets are initially recorded at acquisition cost for both book and tax purposes.
In a taxable stock acquisition, the buyer acquires stock from the target company's shareholders, who are taxed on the difference between the purchase price and their basis in the assets sold, and the selling corporation's shareholders are taxed on the distribution of sale proceeds.
When a parent company develops a subsidiary internally, rather than through acquisition, the parent's inside and outside bases in the assets and stock of the subsidiary, respectively, are equal.