Joulus Gazit & Co.


“Issuance Expenses – Tax Implications”

Although the distinction between a capital expenditure and an ordinary expenditure, similar to the distinction between capital income and ordinary income, is one of the basic principles of tax laws, the line between the two is not always clear. The article explores the challenges of deducting a company’s share issuance expenses, which are connected with the capital structure of the business, and therefore are deductible from the taxpayer’s ordinary income. Moreover, these expenses are non-deductible in the long term by deducting depreciation or deducting expenses incurred in selling an asset, as they cannot be identified with any depreciable asset. The article describes issues involving the deduction of share and option issuance expenses of an industrial company, the restructuring of industrial companies, offerings of various types of bonds, and how does the law treat issuances which did not materialize.
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