Abstract

The merger entity can take over the assets, liabilities and income, etc. net operating losses(NOL) of merged entity, only if they meet certain requirements of corporation tax law in the course of the merging. However, the merger entity can execute many of the tax strategies in order to reduce the tax burden of the merged entity in the case that the merger entity can not succeed the NOL of the merged entity. The purpose of this study is to analyze the tax strategy cases to reduce the tax burden of the merged entity, using the tax bad debt allowance in the situation that merged entity does not succeed to the NOL of the merged corporation. Especially, the merging case of KB and KB Card in this study in 2003 on October 1, and a merging case of FEB and FE card merger case in March 2, 2004. First, KB, in the process of merging the KB Card, faced the situation that it does not succeed to NOL of KB cards, asset KB Card caused by an allowance for credit cards and credit card receivables in accordance with the qualitative classification to ever classify bonds, bonds with high quality was recognized an allowance in the amount of the minimum. The reason for this is if the allowance is recognized NOL. This is because they did not receive the succession. After the merger, and KB could not reduce the tax burden as much as possible by recognizing the allowance for credit card receivables and succession received. In this analysis it was estimated that the savings in this KB of the tax burden would have to pay for if you have not done the same strategy to 93.02% effective tax strategy about 200,852 million won. Second, FEB selected the minimum rate, amount deductible, set in the process of calculating the FE card in the situation that it does not succeed to NOL of FE card. FE card to allow tax deductible allowance limit inclusion was counted maximize allowance. The analysis of the effects of such a tax strategy FEB was estimated savings of approximately 40.79% to 169,977 million won of the tax burden on the FE card if you select the top level of tax deductible allowance limit inclusion.

Keywords

• Bad Debt Allowance
• NOL
• Tax Strategies
• Merger
• Bank

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