What is the difference between a Type B and Type C reorganization?
However, in a Type B reorganization there are no formal assumptions of the targets liabilities; the liabilities remain with the target corporation. On the other hand, in a Type C reorganization, the purchasing corporation becomes the owner of substantially all of the targets assets.
What is a reorganization agreement?
Reorganization Agreement means any contract, agreement, arrangement, commitment, understanding, instrument, loan note, security, transfer document, or other document executed or presented for the purposes of, in relation to or arising from, the implementation of the Plan of Reorganization.
What is IRS Section 355 spin-off?
Section 355 of the Internal Revenue Code (IRC) provides an exemption to these distribution rules, allowing a corporation to spin off or distribute shares of a subsidiary in a transaction that is tax-free to both shareholders and the parent company.
What is a Section 355 plan of reorganization?
In a Section 355 divisive transaction, a corporation usually distributes stock of one or more controlled subsidiaries to its shareholders without gain recognition at the corporate or shareholder level. The transaction can be structured as a spin-off, split-off, split-up, or splint-off.
What are distributions under section 355?
Section 355(a)(1) provides that, if certain requirements are met, a corporation may distribute stock and securities of a controlled corporation to its shareholders and security holders without recognition of gain or loss (nonrecognition treatment) or income to the recipient shareholders or security holders.
What is a Type C reorganization?
C-REORGANIZATIONS 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 Acquirors voting.
What is a Type D reorganization?
Overview. In a D reorganization, one corporation transfers all or part of its assets to another corporation. Immediately after the transfer, the transferring corporation or one or more of its shareholders must be in control of the corporation that acquired the assets.
What are the requirements for 355?
A transaction must satisfy two sets of requirements to qualify as a section 355 transaction and obtain the tax consequences described above. First, the transaction must satisfy the statutory requirements in section 355 itself(i) control; (ii) device; (iii) active trade or business; and (iv) distribution.
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 Section 355 of the Code?
Section 355 provides that if certain requirements are met, a corporation may distribute stock and securities in a controlled corporation to its shareholders and security holders without causing the distributees to recognize gain or loss.
