What is a 368 reorganization?
Internal Revenue Code (IRC) Section 368 allows merger and acquisition transactions to qualify as a reorganization when an acquiring corporation gives a substantial amount of its own stock as consideration to the acquired (or “target”) corporation.
What is a Type G reorganization?
A Type G reorganization (a bankruptcy reorganization) is used by financially distressed corporations to transfer assets in a Title 11 or similar action.
What is a 368 A 1 F reorganization?
368(a)(1)(F) provides that an F reorganization is a mere change in identity, form, or place of organization of one corporation, however effected. Although the definition of an F reorganization seems short and simple, it does leave ambiguity as to the specific requirements.
Which of the types of statutory reorganization are acquisitive?
“A” REORGANIZATION)
One type of acquisitive reorganization is a statutory merger or consolidation, or an A-reorganization.
What is an F reorganization?
The I.R.C. defines a F Reorganization as “a mere change in identity, form, or place of organization of one corporation, however effected.”[1] This mere change can be accomplished in many ways and for different reasons.
What is a Type E Reorganization?
A Type E reorganization is a recapitalization transaction. A recapitalization is an internal restructuring that involves the reshuffling of an existing corporation’s capital structure (for example, changing the mix of its debt and equity financing). Practical Law Home.
What is a Type E reorganization?
How do you do type F reorganization?
One common way of completing an F Reorganization is through the creation of a new corporation, which initially becomes the parent holding company of a new entity that will operate the existing business. The parent holding company then sells part or all of its interest in the new entity.
What is a Type B reorganization?
A Type “B” reorganization is a stock-for-stock transaction in which one corporation (the acquiring corporation) acquires the stock of another corporation (the target corporation). Only voting stock of the acquiring corporation or its parent may be used in the acquisition.
What is a triangular C reorganization?
A triangular C reorganization is an acquisition by S of substantially all of T’s assets in exchange for P stock in a transaction that qualifies as a reorganization under section 368(a)(1)(C).
Is a name change an F reorg?
As indicated in Sec. 368, an F reorganization may be effected by changing the identity, form, or place of organization of a corporation. Thus, a change in the name of a corporation could qualify as an F reorganization.
Can an LLC do an F reorganization?
A company might also undergo an F reorganization, convert from an S corporation to a single member LLC, and then contribute the single member LLC interest to a new C corporation.
What is a C reorganization?
A C-reorganization, otherwise known as a “practical merger,” is where a target. corporation (“Target”) transfers “substantially all” of its properties to an acquiring. corporation (“Acquiror”) solely in exchange for all or a part of Acquiror’s “voting.
What is the purpose of an F reorganization?
An F Reorganization is an identity, form, or place of organization change, according to the IRS Sec. 368(a)(1)(F). It happens when a company transfers or is classified as transferring all of its assets to another company.
What is a Type F reorganization?
An F-reorganization is a type of typically tax-free reorganizational structure that often involves a target company taxed as an S-corporation. The F-reorganization is so named because it involves a change in “form” of the target, while not changing the substance of the target for tax purposes.
What is the benefit of an F reorganization?
F reorganizations allow buyers in M & A transactions to obtain a step-up in the tax basis of the target’s assets without being reliant on the target maintaining its S corporation status, as required for Section 338(h)(10) election purposes. They also simplify transferring titles, licenses, etc.
What are the requirements for an F reorganization?
The Treasury regulations set forth six requirements for a reorganization to qualify as a tax-free reorganization.
- Resulting Corporation stock distributed in exchange for Transferor Corporation stock.
- Identity of stock ownership.
- Prior assets or attributes of Resulting Corporation.
- Liquidation of Transferor Corporation.
What is an S corp inversion?
The S corporation inversion is accomplished by having the shareholders of the S corporation (“Old S”) transfer their stock to a newly formed S corporation (“New S”) in exchange for all the stock of New S.