Legal Entity Restructuring: State Tax Implications

Analyzing Liquidation and Conversion Options to Achieve Tax Benefits

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

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Conducted on Thursday, November 18, 2010

Recorded event now available

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Course Materials

This course will provide tax executives and advisors with an analysis of the steps for leading a review of a company's business entities, focused on minimizing state taxes without undercutting the company's operations.


Networks of C corporations, LLCs and partnerships that served a useful function for the parent company during a healthy economy may pose an unaffordable risk, from a state tax standpoint, during a struggling economy. Tax staffs should not postpone a comprehensive review of legal entities.

A business unit that has outlived its usefulness can make the FAS 109/FIN 48 calculation of tax rates on deferred taxes painstaking, trigger undesired nexus in a state, or result in income and losses among subsidiaries that are difficult to offset, just to name a few associated challenges.

However, the analysis of whether to liquidate legal entities or convert them to disregarded entities is complicated, requiring the tax staff to solicit help from, and coordinate with, other departments ranging from legal to HR. Experiences and best practices from tax advisors can prove invaluable.

Listen as our panel of veteran tax consultants helps you plan an effective road map for evaluating your company's legal entities with an eye toward restructuring in order to reduce state tax bills and exposure.



  1. Current trends in federal and state law and regs on legal entity restructuring
    1. Examples of some specific states
  2. Process for liquidating business entity or converting to disregarded entity
    1. C corporation
    2. Partnership
    3. LLC
  3. Tax implications to consider in restructuring entities
    1. Effective tax rates calculation under FAS 109 and FIN 48
    2. Income tax nexus-triggering activities
    3. Dispersal of profits and losses among entities
    4. Use of NOLs
    5. Other issues
  4. Best practices for a coordinated approach to entity restructuring
    1. Led by corporate tax, or with tax in key position
    2. Working with other departments (e.g. legal, HR, accounting, finance)


The panel will address these and other important topics:

  • Structural changes: What is involved in liquidating an entity or converting it to a disregarded entity?
  • FAS 109/FIN 48 disclosures: Is your tax staff spending too much time on calculating effective tax rates because of outmoded entities?
  • Nexus analysis: Could eliminating certain entities reduce your company's tax exposure in certain states?
  • Losses and earnings: Are they imbalanced in some company entities, resulting in a needlessly high overall state income tax rate?
  • Getting help from within: What other company departments need to be part of a business entity evaluation? How and when should they be brought into the effort?


Clark Calhoun
Clark Calhoun

Alston & Bird

He represents clients in state and local controversy and litigation matters, primarily those involving corporate...  |  Read More

Pat Derdenger
Pat Derdenger

Tax Partner
Steptoe & Johnson

Mr. Derdenger has more than 30 years of tax advisory experience, with a practice focused on federal, state and...  |  Read More

Michael A. Jacobs
Michael A. Jacobs

Reed Smith

He is a member of the firm's State Tax Group and his practice emphasizes state tax planning in business...  |  Read More

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