The Study Of Stock Acquisition In Taxation And Accounting Treatment

With the new wave of M&A whirlwind continued, Stock Acquisition in recent years hasbecome the most basic and the most common way of M&A. Stock Acquisition in tax law isthe same as holding merger in accounting. In2006, a new Accounting Standards ForBusiness Enterprises was issued to make the accounting treatment of Stock Acquisition muchmore specific. In2009, Ministry of Finance and State Administration of Taxation issued the"enterprise income tax on corporate restructuring business address several issues" clearlydefined the corporate income tax treatment in Stock Acquisition business. In December2014,they issued "concerning the non-monetary assets investment enterprise income tax policyissues "promoting corporate restructuring announcement concerning the enterprise incometax deal with the problems", these files give companies four choices.The paper mainly uses comparative analysis and case analysis. Firstly, the paperexpounds the influences of five kinds of theory about Stock Acquisition. Secondly, compareand analysis the treatment of enterprise income tax, and the differences of tax and accountingtreatment of Stock Acquisition are summarized. Finally, the paper shows the accounting andtax treatment of stock acquisition of CHENGZHI SHAREHOLDING CO. LTD and helps theenterprise select the most favorable tax treatment method.Enterprises should consider more to select the most favorable corporate tax treatment.When the assignor has huge losses and they choose use general tax restructuring, the equitytransfer income. When Stock Acquisition happens, the assignor don’t pay enterprise incometax, if only considering the assignor, the equity transfer model is better; but acquirers need topay a lot of income tax when they will sell. If they take the non-monetary assets investmentmode, although the assignor enterprises confirm some income, but the invested enterpriseshall, when the invested enterprise sells equity, they don’t need to pay enterprise income tax.When the assignor and acquirers are related parties, they should integrate computation toconfirme the best tax plan, the assignor have intention to make correlation and cashing in tax,the non-monetary assets investment mode is superior to the equity transfer mode. Acquiredusing special tax treatment, the assignor may not necessarily be associated enterprises, the applicable scope of the special tax treatment is broader than equity transfer. Because of theproportional constraints of"50%"and"85", the special tax treatment has much more harshconditions than equity transfer.