Section 30 Definition of a Recapitalization

• Library: Bus Trans 2005

Corporate recapitalizations are used for many purposes, including:

• adjusting equity ownership for control and management purposes
• simplifying the corporation’s capital structure
• estate planning; and
• alleviating financing problems

I.R.C. § 368(a)(1)(E) provides that a reorganization for federal income tax purposes includes a recapitalization. Neither the Internal Revenue Code nor the regulations define the term “recapitalization.” But Treas. Reg. § 1.368-2(e) provides that a recapitalization takes...