Details of Patterns of Reorganization
Details of Patterns of Reorganization
• “A” Reorganization
• “B” Reorganization
• “C” Reorganization
• “D” Reorganization
• “E” Reorganization
• “F” Reorganization
• “G” Reorganization
“A” Reorganization
Type “A” Reorganization consists of
• Merger
• Consolidation
Both involve the acquisition of one company’s assets by another.
Merger
Explanation:
• Target transfers its assets and liabilities to Acquiring in exchange for part of Acquiring Corporation’s stock.
• Target exchanges the Acquiring stock received for all of its shareholders’ Target stock, and Target dissolves.
• After the reorganization, Target Corporation no longer exists and Target shareholders are now shareholders of Acquiring Corporation.
Consolidation
Explanation:
• T1 and T2 transfer their assets to C in exchange for C’s stock.
• T1 and T2 exchange the C stock received for the T1 and T2 stock held by their shareholders, and then TI and T2 dissolve.
• After the reorganization, T1 and T2 no longer exist, and the T1 and T2 shareholders are now shareholders of C Corporation.
Conclusion
The end result of an “A” reorganization, merger or consolidation, is one surviving corporation. It may be undesirable where management of the acquiring corporation does not want to combine the assets of its corporation with those of the target.
A possible solution would be for the acquiring corporation to create a new subsidiary and transfer the assets of the target company to the newly formed (or existing) subsidiary in a nontaxable § 3 5 1 exchange.
Return to Corporate Tax Planning
To receive our free newsletter, contact us here.
Subscribe our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Tell Me Your Value Equation
Every company feels like it has what it takes to make a difference in its customer’s lives. No matter what product or service they offer their clients, all companies feel like they can do it better than anyone else. So what makes one company stick out from another? Is it how much money that company…
How to Handle Tough Decisions
Everyone has to make decisions in life and many of those decisions can be very difficult to make. The same can be said for businesses. Decision makers in the business world face a lot of tough choices and some of these choices can actually make or break their companies. So how do they make tough…
Using a Tax Shelter? IRS Says Beware
People look for many different ways to save on taxes, or even to avoid paying some of the taxes they really do owe. However, despite taxpayers’ best efforts, the IRS is always on the prowl and if you’re using unscrupulous means to avoid paying taxes there is a good chance you will get caught, including…
What Is Section 1202 Stock?
The Protecting Americans From Tax Hikes Act of 2015 (PATH Act), which was signed into law late last year, finally made several temporary tax breaks permanent. Among the tax breaks included is the Small Business Stock Gains Exclusion, known as Section 1202. So what is the Small Business Stock Gain Exclusion? Section 1202 is designed…