RemSleep Holdings Inc (RMSL)

[ShortonCash]

What is the value of the tax loss after the reverse merger, what would another company pay on top of the value of the claims for the tax loss coverage? Seems likey that KATX and KATG Holding are in a position to benifit.

http://www.scribd.com/doc/54758874/8/Reverse-Merger


Generally, a company with the track record should have a less profit earning or loss making but viable company amalgamated with it to have benefits of economies of scale of production and marketingnetwork, etc. As a consequence of this merger the profit earning company survives and the loss makingcompany extinguishes its existence. But in many cases, the sick company¶s survival becomes moreimportant for many strategic reasons and to conserve community interest. The law providesencouragement through tax relief for the companies that are profitable but get merged with the lossmaking companies. Infact this type of merger is not a normal or a routine merger. It is, therefore, calledas a

Reverse Merger.

The allurement for such mergers is the tax savings under the Income-tax Act, 1961. Section 72Aof the Act ensures the tax relief which becomes attractive for amalgamations of sick company with ahealthy and profitable company to take the advantage of carry forward losses. Taking advantage of the provisions of section 72A through merger or amalgamation is known as reverse merger, which givessurvival to the sick unit by merging it with the healthy unit. The healthy unit extincts loosing its nameand the surviving sick company retains its name. Companies to take advantage of the section follow thisroute but after a year or so change their names to the one of the healthy company as were done amongstothers by Kirloskar

Pneumatics Ltd. The company merged with Kirloskar Tractors Ltd, a sick unit andinitially lost its name but after one year it changed its name as was prior to merger.

Reverse Merger under Tax Laws

Section 72A of the Income-tax Act, 1961 is meant to facilitate rejuvenation of sick industrialundertaking by merging with healthier industrial companies having incentive in the form of tax savingsdesigned with the sole intention to benefit the general public through continued productive activity,increased employment avenues and generation of revenue.