Question

Explain the attributes of a stock transaction ( or trade)?

Explain the attributes of a stock transaction ( or trade)?

Homework Answers

Answer #1

A stock transaction refers to the process that occurs when there is a change in the ownership of stock. The main attributes of a stock transaction are:

-- The sale of stock occurs among the buyer and the target company’s shareholders.

-- The sale of assets is not involved.

-- The target company remains in existence and intact post-transaction

-- In a context to S corporation or C Corporation the shareholders recognize gain or loss and not the target company

-- It is usually highly desirable for the selling shareholders as it leads in one layer of taxation (by the shareholders) and double taxation avoidance that happens with sale of asset by C corporations

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