Are F reorganizations tax-free?
Are F reorganizations tax-free?
The F Reorganization enables restructuring to be done on a tax-free basis and it can be very valuable in pre-transaction planning. For any questions regarding F Reorganizations and other tax restructuring transactions, any attorney with Frost Brown Todd’s Tax Practice. [1] I.R.C. § 368(a)(1)(F).
How does an F reorganization work?
Pursuant to the F reorganization, Target Holding will file a full-year, uninterrupted return, inasmuch as the F reorganization does not break Target’s tax year and Target Holding is deemed a continuation of Target. That full-year federal income tax return is filed in the name and federal EIN of Target Holding.
What is an F organization?
An “F” reorganization is a type of tax-free reorganization under Internal Revenue Code Section 368(a)(1)(F), which includes a mere change in identity or form of one corporation. F reorganizations are typically used to effectuate a tax-free shift of a single operating company.
Can a disregarded entity own an S corporation?
These LLCs are called disregarded entities by the IRS, and, in accordance with IRS rulings, are allowed to own a stake in an S Corporation. This is subject to the same restrictions as all the other owners of an S Corporation.
What does F reorg mean?
Do I need a new EIN for an F reorg?
The previously assigned EIN should be used by the surviving corporation in a statutory merger and in a reincorporation qualifying as an F reorganization. A new EIN should be requested by the new corporation in a consolidation and in any reincorporation transaction not qualifying as an F reorganization.
Why do you do an F reorg?
F reorganizations are typically used to effectuate a tax-free shift of a single operating company. They are frequently used as part of a pre-sale strategy or for changing certain undesired attributes of an operating company.
