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F Reorganizations and Other Tax Planning for S Corporation Acquisitions and Investments

A live 110-minute CPE webinar with interactive Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
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Tuesday, August 13, 2024

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, July 19, 2024

or call 1-800-926-7926

This webinar will discuss tax planning for S corporation investments and acquisitions, including the practical uses of F reorganizations in purchasing, selling, and restructuring S corporations. Our panel of taxation experts will walk you through examples and common scenarios, including pre-transaction planning for S corporation investments and acquisitions, the qualified Subchapter S subsidiary election, and comparing F reorganizations with alternative elections under Sections 338(h)(10) and 336(e).

Description

S corporation shareholders will generally prefer the tax treatment afforded to them in a stock sale, whereas buyers will want to structure S corporation acquisitions to achieve a stepped-up tax basis in the S corporation’s assets. To obtain a step-up in the tax basis of the S corporation’s assets, buyers may consider structuring the acquisition as a deemed asset sale by negotiating with sellers to make an election under Sections 338(h)(10) or 336(e). However, such elections impose strict requirements and significant limitations. As an alternative to elections made under Sections 338(h)(10) or 336(e), tax-free reorganizations under Section 368(a)(1)(F) (“F reorganizations”) can also provide a basis step-up to buyers. An F reorganization is defined under Section 368(a)(1)(F) as "a mere change in identity, form, or place of organization of one corporation, however effected." Six requirements must be met under the Treasury regulations to effect these reorganizations. Revenue Ruling 2008-18 and other IRS guidance outlines the sequence of steps that should be followed to ensure the S corporation election remains intact after the F reorganization.

F reorganizations can be used to mitigate against the risk that a target’s S corporation election is invalid or terminated, to facilitate equity rollovers by sellers, and to enable investments from disqualified S corporation shareholders.

Pass-through entities and corporate tax advisers need to comprehend the tax benefits and caveats of F reorganizations.

Listen as our panel of experts explains how to utilize F reorganizations to solve common problems in S corporation investments and acquisitions.

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Outline

  1. S corporations: an introduction
  2. Considerations for S corporation buyers and investors
  3. Considerations for S corporation shareholders
  4. Section 338(h)(10) and Section 336(e) elections
  5. Common issues with S corporation elections
  6. F reorganizations: an introduction
  7. F reorganizations involving S corporations: Revenue Ruling 2008-18
  8. Benefits and caveats to F reorganizations involving S corporations; comparison to elections under Sections 338(h)(10) and 336(e)
  9. Considerations for purchase and sale agreements
  10. State tax considerations
  11. International tax planning and F reorganizations involving S corporations
  12. Estate planning and F reorganizations involving S corporations
  13. Tax Return Reporting and Compliance

Benefits

The panel will cover these and other critical issues:

  • Practical uses of F reorganizations for S corporation issues
  • F reorganizations compared to elections under Section 338(h)(10) and 336(e) to treat stock purchases as asset purchases
  • Structuring an F reorganization to ensure an S election remains intact and the business retains its EIN
  • Meeting the six requirements under the Treasury regulations for F reorganizations
  • Examples detailing common F reorganization scenarios

Faculty

Gilbert, David A.
David A. Gilbert

Partner
Pierson Ferdinand

Mr. Gilbert represents domestic and international clients in a wide range of federal, state, and local tax matters. He...  |  Read More

Pasmanik, Philip
Philip T. Pasmanik, CPA, MST

Partner
Hertz Herson

Mr. Pasmanik, CPA, MST, a Partner at Hertz Herson, has over 25 years of experience in Federal, International, and State...  |  Read More

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