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Financial Terms | |
Tax free acquisition |
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Definition of Tax free acquisitionTax free acquisitionA merger or consolidation in which 1) the acquirer's tax basis in each asset whose
Related Terms:acquisitionTakeover of a firm by purchase of that firm’s common Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. Acquisition of stockA merger or consolidation in which an acquirer purchases the acquiree's stock. After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Arbitrage-free option-pricing modelsYield curve option-pricing models. Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. ![]() Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. average tax rateTotal taxes owed divided by total income. Before-tax profit marginThe ratio of net income before taxes to net sales. Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Cash flow after interest and taxesNet income plus depreciation. Company AcquisitionsAssets acquired to create money. May include plant, machinery and equipment, shares of another company etc. Corporate acquisitionThe acquisition of one firm by anther firm. Corporate tax viewThe argument that double (corporate and individual) taxation of equity returns makes Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to ![]() Creative Acquisition AccountingThe allocation to expense of a greater portion of the price Current Income Tax ExpenseThat portion of the total income tax provision that is based on Current Tax Payment Act of 1943A federal Act requiring employers to withhold income taxes from employee pay. Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred Tax AssetFuture tax benefit that results from (1) the origination of a temporary difference Deferred Tax LiabilityFuture tax obligation that results from the origination of a temporary Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. depreciation tax shieldReduction in taxes attributable to the depreciation allowance. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by Effective Tax RateThe total tax provision divided by pretax book income from continuing Electronic Federal Tax Payment Systems (EFTPS)An electronic funds transfer system used by businesses to remit taxes to the government. Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign free cash flowGenerally speaking, this term refers to cash flow from Free Cash FlowThe funds available for distribution to the capital providers of the Free cash flowsCash not required for operations or for reinvestment. Often defined as earnings before Free floatAn exchange rate system characterized by the absence of government intervention. Also known as Free on boardImplies that distributive services like transport and handling performed on goods up to the Free-on-Board (FOB) DestinationA shipping arrangement agreed to between buyer and Free-on-Board (FOB) Shipping PointA shipping arrangement agreed to between buyer and Free reservesExcess reserves minus member bank borrowings at the Fed. Free riderA follower who avoids the cost and expense of finding the best course of action and by simply Free TradeThe absence of any government restrictions, such as tariffs or quotas, on imports or exports. Horizontal acquisitionMerger between two companies producing similar goods or services. Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Income Tax ProvisionThe expense deduction from pretax book income reported on the Indirect Taxestaxes paid by consumers when they buy goods and services. A sales tax is an example. Inflation TaxThe loss in purchasing power due to inflation eroding the real value of financial assets such as cash. Interest equalization taxtax on foreign investment by residents of the U.S. which was abolished in 1974. Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. interest tax shieldtax savings resulting from deductibility of interest payments. Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. Limited-tax general obligation bondA general obligation bond that is limited as to revenue sources. Margin Tax RateThe tax rate applicable to the last unit of income. Marginal tax rateThe tax rate that would have to be paid on any additional dollars of taxable income earned. marginal tax rateAdditional taxes owed per dollar of additional income. Marginal Tax RatePercent of an increase in income paid in tax. North American Free Trade Agreement (NAFTA)an agreement among Canada, Mexico, and the United States establishing the North American free Trade Zone, with a resulting reduction in trade barriers Payroll tax expenseThe amount of tax associated with salaries that an employer pays to governments (federal, state, and local). Payroll taxes payableThe amount of payroll taxes owed to the various governments at the end of a period. Personal tax view (of capital structure)The argument that the difference in personal tax rates between Policy Acquisition CostsCosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Profit before interest and taxes (PBIT)See EBIT. Progressive TaxA tax in which the rich pay a larger percentage of income than the poor. Contrast with regressive tax. Progressive tax systemA tax system wherein the average tax rate increases for some increases in income but Proportional TaxA tax taking the same percentage of income regardless of the level of income. Regressive TaxA tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax. Risk-free assetAn asset whose future return is known today with certainty. Risk-free rateThe rate earned on a riskless asset. Risk-free RateThe rate of return on an investment with known future benefits; a Risk-Free RateThe rate of return obtainable on government of Canada treasury bills. Riskless or risk-free assetAn asset whose future return is known today with certainty. The risk free asset is Roth IRA. An IRA account whose earnings are not taxable at all under certaincircumstances. Sales TaxA tax levied as a percentage of retail sales. Short-term tax exemptsShort-term securities issued by states, municipalities, local housing agencies, and Split-rate tax systemA tax system that taxes retained earnings at a higher rate than earnings that are State Disability TaxA tax charged by selected states to maintain a disability insurance Statutory Tax RateThe income tax rate that is stated in income tax law. It is applied to taxable TANs (tax anticipation notes)tax anticipation notes issued by states or municipalities to finance current Tax anticipation bills (TABs)Special bills that the Treasury occasionally issues that mature on corporate tax benefit (of depreciation)the amount of depreciation deductible for tax purposes multiplied by the tax rate; Tax booksSet of books kept by a firm's management for the IRS that follows IRS rules. The stockholder's Tax clawback agreementAn agreement to contribute as equity to a project the value of all previously tax deferralpostponing taxation of an amount until a future date Tax deferral optionThe feature of the U.S. Internal Revenue Code that the capital gains tax on an asset is tax-deferred incomecurrent compensation that is taxed at a future date Tax-deferred retirement plansEmployer-sponsored and other plans that allow contributions and earnings to Tax differential view ( of dividend policy)The view that shareholders prefer capital gains over dividends, tax-exempt incomecurrent compensation that is never taxed Tax-exempt sectorThe municipal bond market where state and local governments raise funds. Bonds issued tax exemptiona tax treatment where income is never subject to income taxation Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |