Submitted by: Submitted by zapataluis01
Views: 140
Words: 1638
Pages: 7
Category: Business and Industry
Date Submitted: 07/13/2014 09:26 AM
Reorganizations and Consolidated Tax Returns
ACC 565 – Organizational Tax Research and Planning
Prof. JAMES WRIGHT, CPA
Strayer University – On Line
Luis A. Zapata
May 26th 2014
Tesacco, Lalana , Del Hoyo and Zapata, CPA
1496 Brickell Avenue
Miami, FL 33131
May 25th, 2014
Mrs. Carmen Delano Chiquito
Agarro Bien Cunegrito ABC, LLC
17405 NW 82nd Street
Medley, FL 33178
Dear Mrs. Delano,
Thanks for the opportunity to serve you, recently you informed us about your intentions for expand your business through reorganizations. Hereinafter you will find our opinion based on best knowledge about this matters and your particular situation.
The acquisition of entities through non-taxable transactions is called the reorganization of the corporations and is dealt with according to the section 368 of the U.S. code of Internal Revenue Service and could be summarize as follows:
Structure | Advantages |
Statutory Merger or Consolidation | * Flexibility in the form of consideration (no voting stock requirement; up to 60% boot can be used) * Tax-free status not affected by disposal of unwanted assets * Eliminates minority or dissenting shareholders |
Forward
Triangular
Merger | * Flexibility in the form of consideration * Target's liabilities isolated in a subsidiary |
Reverse
Triangular
Merger | * Up to 20% boot can be used * Target's liabilities isolated in a subsidiary * Non-transferrable assets and contracts are not lost |
"B" Reorganization | * Target's liabilities isolated in a subsidiary * Non-transferrable assets and contracts are not lost * No "substantially all" requirement |
"C" Reorganization | * Acquirer can be selective in choosing the liabilities it assumes |
All the reorganizations mentioned here are the non-taxable transactions and does not carry any tax implication for the execution of transactions if the rules laid out by the said section are followed.(Bloomberg BNA, 2014). There can be...