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Cash merger

Business combination in which the acquiring corporation buys all the assets of the target, recording them at fair market values. The target is absorbed into the acquiring corpora- tion, and has gains on the sales of the assets that appear on its last tax return. In addition, the target shareholder who receives the distributions from the liquidation-must pay tax on the difference between their original investment and the amount of the distribution. A cash merger gives result in double taxation.

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