Section 54 Tax Treatment of Parties to Reorganization

• Library: Bus Trans 2005

Compliance with I.R.C. § 368 and the regulations promulgated with regard to it can allow a reorganization to be generally “tax free” to the participants in the reorganization. The “tax free” label can be deceiving, however, because in some cases taxes are merely deferred, and taxes sometimes apply in an otherwise “tax free” reorganization—e.g., when a shareholder receives securities with a greater principal value than those surrendered, the excess will be treated as boot and will be taxable.

Gain or loss...