What are the tax consequences of a taxable merger?

Question

Quizplus · Accepted Answer

In a taxable merger, selling shareholders must recognize any capital gain. This means that they will have to pay taxes on the gain from selling their shares in the merged company. The other options are not applicable or are incorrect. Depreciation tax shield may be affected by the merger, depending on the value and nature of the assets involved. The depreciable value of assets may also change as a result of the merger. Option A is partially correct, as selling shareholders can defer any capital gain until they sell their shares in the merged company, but they will eventually have to recognize the gain and pay taxes on it.

What Are the Tax Consequences of a Taxable Merger