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Basis Calculations in Section 368 Reorganizations: Tax Deferral Benefits For Subsidiary Shareholders

Reporting Target Company Stockholder Basis in Type B and Reverse Triangular Reorganizations

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, December 14, 2017

Recorded event now available

or call 1-800-926-7926

This course will provide guidance to corporate tax advisers and compliance professionals in determining target stock basis in a Section 368 tax-free reorganization transaction. The panel will offer insights to the accounting, calculations and reporting requirements pursuant to a Section 368 corporate reorganization.


Section 368 of the Internal Revenue Code allows companies to complete a tax-deferred reorganization if it meets certain requirements and conditions. Stock distributions and exchanges must conform to the basis transfer rules found in IRC 362 for the transaction to be tax-free.

There are seven different types of corporate reorganizations/restructurings allowed under Section 368. Each type of reorganization transaction or event has specific reporting requirements, which tax advisers must understand through each stage of the transaction.

The major challenge in reporting a tax-free reorganization under Section 368 is identifying the shareholders and establishing stock bases for the shares they hold. While the Service allows corporate tax advisers to use aggregation methods to calculate shareholder basis in target stock exchanged in a Section 368 transaction, accurately reporting transferred basis remains a complex exercise, with several key issues requiring IRS guidance.

Tax advisers must know the tax and basis transfer rules for each type of transaction specified in Section 368 to accurately report basis transfers and to advise corporate clients of the tax consequences of various spinoff and reorganization transactions.

Listen as our experienced panel provides a practical and hands-on guide to basis calculations challenges arising from a Section 368 reorganization.



  1. IRC Section 368 types of reorganizations
    1. Requirements for tax-free reorganizations (Section 368 types A-G)
    2. Tax consequences of a Section 368 reorganization
      1. To acquiring corporation
      2. To target/acquired corporation
      3. To shareholders
  2. Section 362 basis transfer rules
  3. Basis calculation rules and IRS guidance in a “Type B” reorganization
  4. Basis calculation issues in a “reverse triangular” reorganization
  5. Required filings
  6. Available elections and alternative calculations using net inside basis


The panel will discuss these and other crucial topics:

  • Types of tax-free reorganization and requirements of each
  • What circumstances require a tax adviser to calculate per-shareholder basis in target/acquired stock
  • Calculations and schedules to prepare in anticipation of a reorganization?
  • Basis calculations in a straight “Type B” reorganization vs. in a “reverse triangular” reorganization


Skinner, William
William R. Skinner

Fenwick & West

Mr. Skinner focuses his practice on U.S. international taxation, with a particular emphasis on tax planning and...  |  Read More

Rose L. Williams
Rose L. Williams
Ernst & Young

Ms. Williams is a member of the firm's National Tax Mergers and Acquisitions Group. She has worked with many...  |  Read More

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