In August,Martina decided to seek preferable tax status for her business income.She negotiated the novation of all contractual obligations acquired since November with each of her sole proprietorship's customers.Novation will allow those obligations to rest with her new corporate entity.What did Martina require in order to realize the tax benefit retroactively?

Question

Quizplus · Accepted Answer

Martina needed a shelf company with an incorporation date that predates the earliest of her contracts to realize the tax benefit retroactively. This is because the shelf company's earlier incorporation date allows the transfer of contracts and their associated obligations to be recognized from a time before the actual novation, aligning with the desired retroactive tax status.

In August,Martina Decided to Seek Preferable Tax Status for Her