Formation, Liquidation & Reorganization
A corporate recapitalization can freeze the value of the owner’s stock, potentially reducing the owner’s estate tax liability by removing future appreciation in the value of stock from the owner’s estate.
The tax impact on future shareholder distributions should be considered prior to liquidating an acquired subsidiary.
Sec. 451(c) should be considered when structuring such M&A transactions — including special rules
relating to short tax years of 92 days or less.
This discussion provides an overview of some of the critical valuation issues that arise in Secs. 351, 332, and 338.
Covenants not to compete can protect a company’s interest as long as they are drafted in an appropriate manner, but their 15-year amortization period can cause issues.
Depending on the IPO structure, the company may need to provide tax accruals for additional reporting periods or updates to existing financial statement disclosures.
The built-in gains tax applies to C corporations that make an S corporation election, and it can
be assessed during the five-year period starting with the first tax year for which the S election is effective.
If a corporation is terminating or intending to convert to an LLC taxed as a partnership, the liquidation regulations will apply.
The M&A market is poised to regain its pre-COVID-19 activity levels as many business owners seek to exit closely held businesses or explore alternatives. One popular transaction that could emerge is Sec. 368(a)(1)(F) reorganizations F reorganizations) of S corporations.
Foresight of the potential state tax implications of an F reorganization will allow a seller to evaluate the lesser-known hazards.
A host of new issues have arisen in merger-and-acquisition transactions because of
the unpredictable business environment caused by changes in the law in response
to the COVID-19 pandemic. This article discusses some of the pandemic-related
concerns buyers and sellers will have in M&A transactions, and the additional safeguards
and procedures participants should take to deal with these concerns.
This discussion explores the step transaction doctrine and the facts, analysis, and rulings of Rev. Ruls. 2001-46 and 2008-25, then analyzes the rulings to illustrate how form can make a difference
in multistep transactions.
This article discusses ways taxpayers can structure transactions according to the form that has the most beneficial tax result.
The IRS issued proposed regulations that provide a safe harbor for corporations to calculate built-in gains and losses after an ownership change.
The IRS issued proposed regulations that provide a safe harbor for corporations to calculate built-in gains and losses after an ownership change.
Recently issued proposed regulations on the transfer of life insurance contracts create significant uncertainty regarding their application to tax-free asset acquisitions.
Shareholders and their advisers should be prepared to verify the validity of the S election when the decision is made to begin marketing the company
for sale.
This discussion explores the allocation of E&P in a distribution to which Sec. 355 applies.
The IRS announced that it is reviewing its approach to the active trade or business requirement that must be met for a five-year period for a business to qualify for a tax-free spinoff under Sec. 355 and, as a result, is suspending two revenue rulings, Rev. Ruls. 57-464 and 57-492, in which it previously ruled on the topic.
Tax-free corporate reorganizations, or divisions, can be achieved with split-ups, splitoffs, and spinoffs. A consideration of the reason for the corporate division should guide the determination of which technique would be most beneficial.
