Page 275 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Private Limited Company: A private limited company is a voluntary association of not less than
two and not more than fifty members, whose liability is limited, the transfer of whose shares

is limited to its members and who is not allowed to invite the general public to subscribe to its
shares or debentures.
Public Limited Company: A company whose securities are traded on a stock exchange and can
be bought and sold by anyone.
Shareholders: A shareholder or stockholder is an individual or institution (including a corporation)
that legally owns a share of stock in a public or private corporation.
Subsidiary: A subsidiary is an organisation that a larger business acquired and allowed to
continue running its operations.

11.7 Review Questions

1. Discuss the meaning of liquidation.
2. When is it appropriate to seek liquidation of a company?

3. Elucidate the procedure for liquidation.
4. Describe affect of appointment.

5. Throw some light on the treatment of Income tax upon enterprise liquidation.
6. What are the tax consequences of liquidating a subsidiary?

7. How to structure a plan of liquidation to avoid unanticipated tax liabilities?
8. Elucidate the tax implications of liquidating a company.

9. Write short note on cessation of trade.
10. “When property is transferred or foreclosed upon in satisfaction of a debt, the general rule
is that the taxpayer realises.” Explain.
Answers: Self Assessment

1. False 2. True
3. True 4. False

5. Fair market value (FMV) 6. Liquidator
7. Subsidiary 8. Shareholder

9. False 10. False
11. True 12. False

13. Winding up 14. Profi ts
15. Losses 16. Cessation

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