Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Home
  • Accounting, Taxation, and Reporting
  • Business Taxation

Continuity of Business Enterprise Doctrine - Definition

Written by Jason Gordon

Updated at December 16th, 2020

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Professionalism & Career Development
  • Courses
+ More
Back to:ACCOUNTING & TAXATION

What is the Continuity Of Business Enterprise Doctrine?

The continuity of business enterprise doctrine is a taxation principle in which an acquiring firm must continue the acquired firm's business before the acquisition can qualify as a tax-deferred reorganization. In cases where the acquired firm's business cannot be continued, a significant percentage of the firm's assets must be used for the new business so that the acquisition can qualify as a tax-deferred transaction. The continuity of business enterprise doctrine is a taxation doctrine that stipulates tax treatment for firms during reorganization.

A Little More on What is the Continuity Of Business Enterprise Doctrine

Under the continuity of business enterprise doctrine, before an acquisition can be treated as a tax-deferred reorganization or transaction, the actual business of the acquired firm must be retained or a significant portion of the company's assets used for the combined (new) business. This doctrine is used by the Internal Revenue Service (IRS) for tax treatments when firms go through reorganization. Usually, tax benefits are the motivator of most mergers and acquisitions, this doctrine helps the IRS to control or limit the number of transactions that can be regarded as tax-deferred. An acquisition that fails to meet these criteria will automatically not qualify for a preferential tax treatment despite going through a reorganization.

Reference for Continuity Of Business Enterprise Doctrine

www.businessdictionary.com/definition/continuity-of-business-enterprise-doctrine.htmlhttps://www.investopedia.com Investing Financial Analysishttps://thelawdictionary.org/continuity-of-business-enterprise-doctrine/https://definitions.uslegal.com/c/continuity-of-business-enterprise/https://definitions.uslegal.com/c/continuity-of-entity-doctrine/

Was this article helpful?

Yes
No

Related Articles

  • Accelerated Depreciation - Definition
  • Deferred Income - Definition
  • Phantom Income
  • Regulation M Definition

©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand