Transactions may be partially taxable if the target shareholders receive some nonequity consideration, such as cash or debt, in addition to the acquirer's stock.

Question

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Transactions that involve receipt of non-equity consideration in addition to the acquirer's stock may be partially taxable. This is because the non-equity consideration may be subject to taxes, while the equity consideration may not be.

Transactions May Be Partially Taxable If the Target Shareholders Receive