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Posts: 177
2 weeks ago
Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

▸ Increases the transaction costs associated with selling the subsidiary.

▸ The spin-off is not taxed as a cash distribution.

▸ Shareholders must immediately pay capital gains taxes versus ordinary income taxes on the value of the spin-off.

▸ A spin-off guarantees a lower cost of capital.
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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Posts: 173
2 weeks ago
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The spin-off is not taxed as a cash distribution.
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