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LSDefine

Simple English definitions for legal terms

continuity of interest

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A quick definition of continuity of interest:

Continuity of interest refers to a rule that applies to certain types of business transactions. In simple terms, it means that when one company buys another company, the shareholders of the company being bought must keep some ownership in the new company to avoid paying taxes on the transaction. Similarly, if a company splits into two or more separate companies, the shareholders must keep some ownership in each of the new companies to avoid taxes. This rule helps ensure that the transaction is not just a way to avoid taxes, but rather a legitimate business deal.

A more thorough explanation:

Definition: Continuity of interest refers to a legal requirement that must be met in certain types of corporate reorganizations to qualify for tax-deferred treatment. This requirement mandates that the shareholders of the target corporation must retain an interest in the acquiring or controlled corporation.

Example 1: In an acquisitive reorganization, the shareholders of the target corporation must hold shares in the acquiring corporation to qualify for tax-deferred treatment. For instance, if Company A acquires Company B, the shareholders of Company B must receive shares in Company A and hold them for a certain period to avoid immediate tax consequences.

Example 2: In a divisive reorganization, the shareholders of the target corporation must retain an interest in both the distributing and the controlled corporations to qualify for tax-deferred treatment. For example, if Company A splits into two separate entities, Company B and Company C, the shareholders of Company A must hold shares in both Company B and Company C to avoid immediate tax consequences.

These examples illustrate how continuity of interest is a legal requirement that must be met in certain types of corporate reorganizations to qualify for tax-deferred treatment. It ensures that the shareholders of the target corporation maintain a stake in the new entity and prevents them from immediately realizing taxable gains or losses.

continuity of existence | continuity-of-life doctrine

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medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
Dkk
23:25
@jackfrost11770: if you want but like it aint for me
dk do u ever eat at bk
Dkk
23:48
@chickenburgahfart: I would do that in the Army if really desperate for food or if I had to work through lunch. One of the few fast food places I go to.
bk so slept on
Dkk
0:23
I will take In N Out everyday over it when I can though.
texaslawhopefully
1:22
In N Out is not only the best fast food place, but the prices too are fantastic
Dkk
1:27
Indeed, indeed.
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