A transaction is usually taxable to the target firm's shareholders, if the acquirer's stock is used to purchase at least 30% of the target firm's stock or assets.

Question

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In the United States, the taxability of a transaction to the target firm's shareholders primarily depends on whether the transaction is structured as a taxable or a non-taxable event, not merely on the percentage of the acquirer's stock used in the transaction. Non-taxable transactions often involve stock swaps but must meet specific IRS criteria to qualify.

A Transaction Is Usually Taxable to the Target Firm's Shareholders