divisive reorganization. transfer of all or part of a division, a subsidiary, or a corporate segment in a tax-free manner.

E-REORGANIZATIONS Typically, an E-reorganization involves exchange of bonds for stock, bonds for bonds, or stock for stock.

A section 355 transaction generally involves a parent company owned by. shareholders and a subsidiary owned by the parent. The transaction. generally results in the shareholders of the parent owning stock in two. Gregory N.

Section 355 of the Internal Revenue Code provides a powerful tool in corporate restructurings. A split-off occurs where the parent distributes stock of the controlled corporation to some of its shareholders in exchange for their stock in the distributing parent.

This rule therefore acknowledges that an S corporation can generally participate in a tax-free reorganization under Section 368, acquire the assets or stock of another C or S corporation, including a consolidated group of corporations, engage in a tax-free split-up, split-off or spin-off under Section 355, or engage in …

Internal Revenue Code (IRC) Section 368 allows merger and acquisition transactions to qualify as a reorganization when an acquiring corporation gives a substantial amount of its own stock as consideration to the acquired (or “target”) corporation.

in the case of a triangular reorganization, where the stock of a parent corporation is used in the reorganization, the parent corporation. Thus, in an acquisitive reorganization, both the target corporation and the acquiring corporation are parties to the reorganization.

restructuring
Recapitalization is the process of restructuring a company’s debt and equity mixture, often to stabilize a company’s capital structure. The process mainly involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds.

Section 355 of the Internal Revenue Code (IRC § 355) allows a corporation to make a tax-free distribution to its shareholders of stock and securities in one or more controlled subsidiaries. The split-off resembles a redemption because the shareholders have relinquished stock of the distributing corporation.

355 is exclusively a Subchapter C rule, so using Code Sec. 355 and partnerships in the same breath may seem a bit odd. Yet, for many years now, there have been some circumstances in which a partnership is considered to be engaged in the active conduct of a trade or business.

Basics of a Tax-Free Spin-Off However, 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.

Type A reorganization is a “statutory merger. Usually, mergers/consolidations occur on a consensual basis where the owners/operators/management from the target business help those from the purchaser to ensure that the deal is beneficial and profitable for both parties.