940 Taxation of Mergers & Acquisitions - §003, Fall 2017

Categories: Tax Law Business, Corporate, Commercial Law

Instructor(s) Schnur, Robert

Although this seminar is centered around federal tax issues, it would be extremely valuable (and enjoyable!) for any student with an interest in business law, corporate practice and accounting of all types, including students who do not intend to practice in the tax area. This has been confirmed by numerous student evaluations, as well as by feedback received from alumni, many of whom have described the seminar as one of the most interesting courses they took in law and business school and also one of the most useful in their careers. Students have also reported that their enrollment in the course was quite helpful in seeking appropriate law, corporate and accounting positions.

The course is taught by Adjunct Professor Robert Schnur, who returned to Wisconsin Law after spending six years as a Visiting Adjunct Professor of Tax Law at Cornell Law School, where the seminar was developed and where it attracted students from both the law school and Cornell’s Johnson School of Business. The course covers the basic federal income tax principles governing both taxable and nontaxable mergers and acquisitions and will introduce students to many of the transactional tax issues that arise in planning and advising on such transactions, both for large and smaller businesses. The focus will be on domestic rather than cross-border acquisitions. Enrollment is limited to sixteen students.

The seminar is built around a weekly series of “Assignment Memoranda,” each of which is based on a different hypothetical transaction, viewed from the standpoint of both the acquired entity and its acquirer. These memos are comparable to those that a new young professional in a law firm, corporation or accounting firm might receive from a more senior partner or executive, or a client, and each student will be required during the semester to prepare three written responses to a portion of these memos, based on the assigned reading and on independent research. Each week’s class discussion will be devoted to a discussion of one Assignment Memo and the students’ written responses thereto. There will be no final examination, and the final grade will be based on a student’s written work and class participation.

Prerequisite: A basic course in taxation is an absolute prerequisite for the seminar, unless (a) a student believes that he or she has an equivalent academic or professional background, and (b) receives the instructor’s advance permission to enroll. It is not required that a student have completed a course in corporate taxation or any other tax courses, and the seminar will begin with a brief overview of the manner in which corporations are taxed.

By the end of this course, a student should be able to:
1. Advise a corporation that is to be acquired (the “Target”) or a corporate acquirer (the “Purchaser”) as to the different structures that can be used to accomplish a corporate acquisition and the federal income tax consequences of each such structure.
a. If so requested, this advice will include a description of the potentially available “tax-free” acquisition techniques and the requirements that must be met in order for the transaction to qualify for one of those techniques.
b. For the Target and its shareholders, this advice will include (i) how the clients will calculate their total recognizable taxable gains or losses (if any), (ii) how they will determine the timing of any such recognizable gains or losses and (iii) how they will determine the character of those gains or losses as capital or ordinary in nature (and how, if at all, that character will affect their tax liability from the transaction).
c. For the Purchaser, this advice will include (i) how and when the client will recover for tax purposes the costs of the acquisition (whether those costs are paid to the sellers or third parties) and (ii) what will be the effect of the acquisition on the tax basis of the Target’s assets and the Target’s other tax attributes, such as
net operating loss carryovers.

2. Recognize and identify any special federal income tax issues that are presented by this particular transaction and any factual issues that need to be explored further in order to resolve those issues (such as whether there have been any past transactions or planned future transactions, the existence of which might affect the tax consequences of the current acquisition).

3. Advise the client as to how (if at all) the proposed transaction could be modified so as to minimize the client’s tax consequences from the acquisition in a manner that is legal and ethical, including but not limited to the possibility of making one of the elections available to participants in some corporate acquisitions.

4. Explain all these federal income tax issues to the client (whether the client is the Target, the Purchaser and/or their respective shareholders) in an accurate and understandable manner, whether that explanation is to be communicated to the client orally or in writing.

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