Law 514 Corporations Instructor: Dwight Drake

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Corporate Taxation: Formation, Reorganization, and Liquidation

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Presentation transcript:

Law 514 Corporations Instructor: Dwight Drake Statutory A Reorg - Merger T and B Merge T Disappear Target Corp “T” Buying Corp “B” State Law Merger 50% to 60% Boot allowed B Stock & Boot Target Shareholders Buying Shareholders Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com

Law 514 Corporations Instructor: Dwight Drake Stock Swap B Reorg T Become Sub of B Target Corp “T” Buying Corp “B” T Become Sub of B No Boot Allowed B Stock T Stock Target Shareholders Buying Shareholders Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com

Law 514 Corporations Instructor: Dwight Drake Asset for Stock C Reorg T Assets to B Target Corp “T” Buying Corp “B” Boot allowed for liabilities assumed and other boot (at 20% max) Substantially all assets (90% net FMV) - Buyer’s stock distributed in liquidation as part of reorg. B Stock & Boot B Stock & Boot T Stock Cancelled Target Shareholders Buying Shareholders Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com

Law 514 Corporations Instructor: Dwight Drake Forward Triangular Merger Target Corp “T” Sub Corp “S” T and S Merge T Disappear S Stock Token Assets Buying Corp “B” B Stock & Boot State Law Merger of T and S S survivor in merger 50% to 60% Boot allowed Target Shareholders Buying Shareholders Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com

Law 514 Corporations Instructor: Dwight Drake Reverse Triangular Merger Target Corp “T” Sub Corp “S” T and S Merge S Disappear S Stock Token Assets Buying Corp “B” B Stock & Boot State Law Merger of T and S T survivor in merger 20% Boot allowed Target Shareholders Buying Shareholders Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com

Acquisition Reorg Options Statutory Merger – A Reorg - Merger under state law - 50% to 60% boot allowed Stock Swap – B Reorg - No boot allowed Assets for Stock – C Reorg - Boot allowed for liabilities assumed and other boot (at 20% max) - Substantially all assets (90% net FMV) - Buyer’s stock distributed in liquidation as part of reorg. Forward Triangular Merger – Sub Survivor - Substantially all assets – same as C - Boot of A Reorg – 50% to 60% works Reverse Triangular Merger – Target Survivor - Same as forward but boot limited to 20% Law 514 Corporations Instructor: Dwight Drake Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com