Since the existence of even a slight amount of bootwill destroy a B reorganization, great care must be used in structuring the transaction. Hidden tax in liquidation or deemed liquidation in installment sale. Tax Sales by Municipalities.
In a B reorganization, the sole considerationthat can be used is voting stock of either the acquiring corporation or its parent, but not both. One obvious area is the different income tax treatment from state to state of individuals receiving corporate dividends or gain on stock. Special rules apply when multiple partnerships merge or consolidate. Target can be foreign; Reg. Company Y to a joint venture.
While there are other occurrences in which a seller would want to avoid income tax recognition, income tax deferral is often accomplished through using a proper reorganization that follows federal income tax recognition laws.
Corporation must be recharacterized as those reorganizations from related to file on state statutory merger tax free and statutory mergers. The entity will be disregarded as an entity separate from its owner if it has a single owner and that owner does not have limited liability. Here the taxpayer did not hold the assets in a business activity. QSST as set forth in Treas.
Here, we assume a properly functioning capital market where corporate acquisitions will not occur unless they leave most interested parties in a better position than they would have been absent contracting.
In the states that have no exemption for cooperatives, cooperatives must look to other exemption provisions to determine if they apply or argue that the cooperative stock is not a security pursuant to the Forman test.
One can think of the choice between rules and standards as involving the extent to which a given aspect of a legal command should be resolved in advance or left to an enforcement authority to consider.
Generally speaking, where the LLC is formed for the primary purpose of the merger, and the shareholders of the corporation are also the members of the LLC, it should be the case that all LLC members will approve the merger.