AI
Monday, April 07, 2008 10:22:30 PM
<<Q1: Why is the deal being implemented in two steps? (Non-tautological answers only, please 
)>>
In the US, a well-known tax planning technique to defer gain recognition is to structure the transaction with the "buyer" having a call option and the "seller" a put option. The validity of the technique rests on the factual question of whether there is any realistic possibility that neither option will be exercised.
Since Nestle is Swiss, I doubt this is US tax planning -- they could sell the stock for cash and the capital gain would not be subject to US tax, assuming Nestle holds the stock in Switzerland or otherwise outside the US. But maybe this is Swiss tax planning.
)>> In the US, a well-known tax planning technique to defer gain recognition is to structure the transaction with the "buyer" having a call option and the "seller" a put option. The validity of the technique rests on the factual question of whether there is any realistic possibility that neither option will be exercised.
Since Nestle is Swiss, I doubt this is US tax planning -- they could sell the stock for cash and the capital gain would not be subject to US tax, assuming Nestle holds the stock in Switzerland or otherwise outside the US. But maybe this is Swiss tax planning.
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