Category: Tax

Tax structures, elections and treatment of M&A transactions.

8 articles in this category.

• Basis step-up — An increase in the tax basis of acquired assets to fair market value, allowing the buyer to depreciate or amortise the higher basis going forward. Available in asset deals and 338-elected stock deals.
• F-reorganization — A tax-free 'mere change in form' reorganization under Section 368(a)(1)(F), commonly used to restructure an S-corporation prior to a sale to enable a stock deal that gets asset-deal tax treatment.
• NOL preservation (Section 382) — U.S. Internal Revenue Code Section 382, which limits a corporation's ability to use pre-acquisition net operating losses after a more-than-50% ownership change.
• QSBS in M&A — Qualified Small Business Stock — Section 1202 — provides a federal capital-gains exclusion of up to $10M (or 10x basis) on the sale of qualifying C-corp stock held more than five years.
• Section 338(h)(10) election — A joint U.S. tax election that treats the stock acquisition of a domestic corporation (typically an S-corp or subsidiary) as a deemed asset purchase for tax purposes, giving the buyer a basis step-up.
• Section 368 reorganization types — The Section 368 categories of tax-free reorganizations — Type A (statutory merger), Type B (stock-for-stock), Type C (stock-for-asset), Type D (acquisitive D), Type F (form change) and others.
• Tax due diligence — The tax-focused workstream of buy-side diligence: federal/state/local income tax exposure, sales-and-use tax, payroll tax, transfer pricing, R&D credits, and the tax history of the target entity.
• Taxable vs tax-free reorganization — The threshold tax-structure question in U.S. M&A: whether the seller recognises gain at closing (taxable) or whether the transaction qualifies for non-recognition under the reorganization rules of Section 368.