Deferred consideration and earn-outs
Article Abstract:
The sale of companies has frequently lead to the deferral of consideration or to earn-outs whereby the consideration is variable according to the future performance of the sold company. In deals involving earn-outs satisfied solely in cash, tax planning entails the structuring of a deal to ensure that the initial payment is sufficient to meet the capital gains tax payable. In deals involving earn-outs in cash and shares or cash and loan notes, calculations of the immediate gain are based upon the cash plus the value of the chose-in action. When shares are involved, it is important to structure the deal so that there is clear separation between the element of the earn-out that is satisfied solely by shares and that element that is satisfied by a mixture of cash and shares.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1990
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Budget briefing
Article Abstract:
The new British tax bill is wide ranging. It reduces basic income tax rates to nine percent and may involve further cuts. It also reduces advance corporation taxes. Capital gains and value added tax rates remain unchanged, but the law will have significant impact on charitable and inheritance taxes.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1986
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