On U.S. Federal Income Tax Law Of Stock Acquisitions

In the age of market economy,as a common way to operate capital,stock acquisition refers to an investment where a purchasing corporation can acquire the control right to a target corporation by purchasing a certain number of latter's stock. Asset will be transferred in such course as efficient use of resource with the result of causing income tax consequence which can be divided into taxable stock acquisition and tax-free stock acquisition from a micro perspective while indicating that the legislation institution tend to insert several values to income tax rules of stock acquisition.This article has three chapters apart from the preface and epilogue.Chapter One introduces the concept and classification of stock acquisition and analysis the relationship between stock acquisition and income tax law from which I try to draw out a conclusion that tax consequence indeed should be considered when make a decision on stock acquisition despite it may not be the most important reason for such a transaction,in the hope of showing the importance of income tax law to regulate the stock acquisition.Chapter Two is about the U.S.federal income tax law on stock acquisition. Subchapter One introduces the tax consequence to tax payers and pay more attention to the mechanism known as§338 election as well as the Consistency Rules both of which characterize the U.S.Internal Revenue Code with the conclusion that the rules contain more than one values while Subchapter Two summarize the tax consequence of tax payers and emphasize the conditions of tax-free consequence including " solely for voting stock","continuity of proprietary interest","the business purpose test" and "continuity of the business enterprise" all of which derived from legislation of congress and treasure department and case rules from law courts.By discussing these conditions for stock acquisition in detail from a history perspective I try to find the reasons why they are established and the actual functions they performed.Chapter three is trying to discuss how to use U.S.experience and improve China income tax law system of stock acquisition.Based on the analysis of existing rules and recent outcome of related department,this chapter points out several difficulties and subjects some advice on improving China income tax law after comparing its rules with the U.S.federal income tax law.