This is what happened concerning the Gifa Tax situ
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Posted On: 06/17/2018 10:20:56 AM
This is what happened concerning the Gifa Tax situation IMO https://www.pscpa.com/time-for-a-change-tax-f...nizations/ A reverse merger falls under section 368 as an acquisitive transaction. The main premise of an acquisitive 368 transaction is that the acquiring corporation uses it's own stock as the main form of consideration when purchasing the assets or stock of the selling corporation ("The target"
. An important sidenote to understand is that in this reverse merger, Firefish was the acquiring corporation for tax purposes, and Gifa was the target corporation (even though we all saw the article in which Gifa announced they had bought Firefish......and technically that is true, in a reverse merger the smaller company, or shell, is always the acquiring corporation for tax accounting practices). To the extent the target received no cash, gain will not be recognized, Instead, it will be deferred. The gain can be deferred because the shareholders of the target still only hold stock after the transaction is complete, and under 358 and 362 the sellers take their historical basis in the stock they receive. As such, the sellers are in the same position both before and after the sale (when only stock is exchanged). If there is no cash received, no taxable gain will be triggered. Therefore, the gain is deferred until the shareholder sells their stock for cash. These are our laws, here in the U.S. I have no idea how Gifa's country tax laws work, although Kisa gave us a hint when he said they were "pitiful". The facts are, there was a share exchange, but no one with the company has sold their shares. In fact, they are still trying to complete a few details of the merger (name/symbol change/filings) yet their country's tax collector wanted to tax them for an exorbitant amount of money despite the fact no shares have been sold, triggering any kind of tax issue. This is why Kisa was continuously stating "show us the criteria on how you arrived at how we owe this much" considering no shares have been sold. So, this poster Dragon52 on IHUB, has it completely wrong. It is not that Gifa does'nt know how much their own shares are worth.....that is'nt even the issue.....it is how the tax collector arrived at the amount of tax owed with no gain being triggered as of yet, with no shares sold. The very fact that the tax collector was basically trying to extort such an exorbitant amount of money in fact, should give you a clue that Gifa could indeed, be worth a vast fortune. This is why I have to laugh at some of these wanna be know it all Ihub posters that say such things as "Just figure how much the stock is worth and then subtract the amount of tax owed from it" LOL. That is just NOT how things work. Would you want to be taxed on stock that was not even sold from your account? LOL
. An important sidenote to understand is that in this reverse merger, Firefish was the acquiring corporation for tax purposes, and Gifa was the target corporation (even though we all saw the article in which Gifa announced they had bought Firefish......and technically that is true, in a reverse merger the smaller company, or shell, is always the acquiring corporation for tax accounting practices). To the extent the target received no cash, gain will not be recognized, Instead, it will be deferred. The gain can be deferred because the shareholders of the target still only hold stock after the transaction is complete, and under 358 and 362 the sellers take their historical basis in the stock they receive. As such, the sellers are in the same position both before and after the sale (when only stock is exchanged). If there is no cash received, no taxable gain will be triggered. Therefore, the gain is deferred until the shareholder sells their stock for cash. These are our laws, here in the U.S. I have no idea how Gifa's country tax laws work, although Kisa gave us a hint when he said they were "pitiful". The facts are, there was a share exchange, but no one with the company has sold their shares. In fact, they are still trying to complete a few details of the merger (name/symbol change/filings) yet their country's tax collector wanted to tax them for an exorbitant amount of money despite the fact no shares have been sold, triggering any kind of tax issue. This is why Kisa was continuously stating "show us the criteria on how you arrived at how we owe this much" considering no shares have been sold. So, this poster Dragon52 on IHUB, has it completely wrong. It is not that Gifa does'nt know how much their own shares are worth.....that is'nt even the issue.....it is how the tax collector arrived at the amount of tax owed with no gain being triggered as of yet, with no shares sold. The very fact that the tax collector was basically trying to extort such an exorbitant amount of money in fact, should give you a clue that Gifa could indeed, be worth a vast fortune. This is why I have to laugh at some of these wanna be know it all Ihub posters that say such things as "Just figure how much the stock is worth and then subtract the amount of tax owed from it" LOL. That is just NOT how things work. Would you want to be taxed on stock that was not even sold from your account? LOL
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