Tag Archives: Section 351

Foreign Books and Records

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Our Federal Tax Group explores how a foreign person’s books can become relevant for U.S. tax purposes even when it has no contact with the U.S. tax system. For example, a Section 351 exchange When the basis in U.S. stock isn’t irrelevant Preparing for the day of relevance Read the full advisory here. [...]Read more

Federal Tax ADVISORY: Taxpayer Wish List

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The Treasury is open for business to change tax rules to ease your compliance burdens. Our Federal Tax Group points out a few regulations that could use some updating. Reduce red tape Regulations can ease the burden What's on your list? Read the full advisory here. [...]Read more

Federal Tax ADVISORY: Predecessor and Successor Regulations

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There are still many questions about the meaning of the Treasury’s new regulations applying Section 355(e) to predecessors and successors. Our Federal Tax Group examines the answers we do have and what they mean for practitioners.

Read the full advisory here. 

Manchester United Ruling?

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LTR 201242007 is a section 351 ruling with a public offering: not a busted 351, but a good 351. It likely involves the IPO of the new Manchester United football team holding company that was taken public by the Glazer interests, which acquired the UK football team in recent years. The main tax point of significance is that the IRS may have approved a 10:1 disparity in vote between voting classes, for purposes of respecting the low vote stock as voting stock. If so, for section 351 purposes, all of the stock was voting stock and section 351 applied to the Glazer’s contribution of the highly [...]Read more

Federal Tax Advisory: F Reorganizations and Double Dummies

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This advisory discusses LTR 201222014, which ruled that persons contributing property to a new corporation in exchange for stock can form a control group with other persons contributing the stock of another corporation (target), and therefore enjoy Section 351 nonrecognition treatment. This might seem obvious to practitioners familiar with combined reorganization/351 contributions that were first treated favorably under Section 351 by LTR 9143025. The transaction often takes the form of a double dummy drop down, whereby a new holding company puts the contributed property in one subsidiary and holds [...]Read more

Cross Chain… 351?

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LTR 201150021 is a surprising cross chain restructuring ruling that treats the transfer of the assets of one subsidiary of P to a subsidiary at the bottom of another chain of subsidiaries below P as a series of section 351 exchanges and a D reorganization at the bottom of the acquiring chain. This is somewhat inconsistent with Rev. Rul. 78-130, 1978-1 C.B. 140. Although not the focus of the ruling, it appears that what was actually going on with the taxpayer was repatriation of foreign earnings in a most efficient manner, plus a reshuffling of assets to facilitate further repatriations. Facts: [...]Read more

Repeal Nonqualified Preferred?

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What Was the Problem? The creation of the nonqualified preferred stock rule in 1997 was aimed at transactions like this:  Bigco puts cash into Newco, and some shareholders of Target put Target common stock into Newco for nonqualified preferred stock; Newco then buys the rest of the Target stock for cash.  The shareholder who got Newco preferred stock can be very secure and can delay gain recognition until a more convenient time.   Congress thought the shareholder who got the preferred stock ought to recognize gain or loss in the Target stock if the preferred stock had certain identified [...]Read more