This study compares the different tax treatments that may be applied to the amounts paid/received under warranty clauses.
Compare tax treatments that may be applied to the amounts paid/received under warranty....
During the acquisition of a private or public company, it is standard practice in many other jurisdictions, for the purchaser to seek comprehensive warranties and indemnities from the vendor.
In acquiring the shares of the target company, the purchaser will also acquire its liabilities and commitments, known or unknown, actual or contingent.
The warranties are thus a kind of insurance provided by the vendor covering the liabilities of the target company.