Structuring the Acquisition of an S Corporation

S-Corp (S-CORP) is considered to be one of the well-known types of corporate legal forms. When considering the resale S-Corporation problem, the transaction structure is fundamentally planned from the tax perspective (standard, before the LOI), which maximizes the advantages of execution, and is the shareholder. Avoid "stone under the water" that could lead to a promise of sale.

For business purposes, the company is usually established as a limited liability company, partnership, and corporation. However, for taxation, the company is taxed as a corporation, partnership, or no n-management organization. Company C is taxed at the company level and shareholder level. Company S is a company that has decided to distribute income, loss, deduction, and loans to shareholders, and is taxed only at the shareholder level.

In order to obtain the status of S-Corporation, the company needs to comply with the section 1361, [5], and does not need to own more than 100 shareholders, shareholders-physical people (trust) , Except for some forms of inheritance and tax exemption organizations), that there is no need to own a foreign-non-resident shareholder, and there is no need to own a type 1 or more. It is considered that it is not an illegal company (defined in code).

When traders begin to find the possibility of doing their business, they are basically discussed from the beginning, as traders and customers ride the same wave. For tax, business purchase is declared as acquisition of assets or promoting sales. In principle, the owner wants to promote his own for various reasons (depending on the company's assets). In the first place, when reselling a promotion, shareholders can earn money from funds because the promotion is considered a serious asset. When resale of assets, non-organic companies (including S-Corporation shareholders) receive ordinary income or income from the similarity of asset assets. Second, in terms of differences in assets, resale promotions have the ability to demand the trader not to transfer company assets and licenses, or to obtain the consent of three. < SPAN> S Corporation (S-CORP) is considered to be one of the best-known types of corporate forms. When considering the resale S-Corporation problem, the transaction structure is fundamentally planned from the tax perspective (standard, before the LOI), which maximizes the advantages of execution, and is the shareholder. Avoid "stone under the water" that could lead to a promise of sale.

For business purposes, the company is usually established as a limited liability company, partnership, and corporation. However, for taxation, the company is taxed as a corporation, partnership, or no n-management organization. Company C is taxed at the company level and shareholder level. Company S is a company that has decided to distribute income, loss, deduction, and loans to shareholders, and is taxed only at the shareholder level.

In order to obtain the status of S-Corporation, the company needs to comply with the section 1361, [5], and does not need to own more than 100 shareholders, shareholders-physical people (trust) , Except for some forms of inheritance and tax exemption organizations), that there is no need to own a foreign-non-resident shareholder, and there is no need to own a type 1 or more. It is considered that it is not an illegal company (defined in code).

When traders begin to find the possibility of doing their business, they are basically discussed from the beginning, as traders and customers ride the same wave. For tax, business purchase is declared as acquisition of assets or promoting sales. In principle, the owner wants to promote his own for various reasons (depending on the company's assets). In the first place, when reselling a promotion, shareholders can earn money from funds because the promotion is considered a serious asset. When resale of assets, non-organic companies (including S-Corporation shareholders) receive ordinary income or income from the similarity of asset assets. Second, in terms of differences in assets, resale promotions have the ability to demand the trader not to transfer company assets and licenses, or to obtain the consent of three. S-Corp (S-CORP) is considered to be one of the well-known types of corporate legal forms. When considering the resale S-Corporation problem, the transaction structure is fundamentally planned from the tax perspective (standard, before the LOI), which maximizes the advantages of execution, and is the shareholder. Avoid "stone under the water" that could lead to a promise of sale.

For business purposes, the company is usually established as a limited liability company, partnership, and corporation. However, for taxation, the company is taxed as a corporation, partnership, or no n-management organization. Company C is taxed at the company level and shareholder level. Company S is a company that has decided to distribute income, loss, deduction, and loans to shareholders, and is taxed only at the shareholder level.

In order to obtain the status of S-Corporation, the company needs to comply with the section 1361, [5], and does not need to own more than 100 shareholders, shareholders-physical people (trust) , Except for some forms of inheritance and tax exemption organizations), that there is no need to own a foreign-non-resident shareholder, and there is no need to own more than the first type. It is considered that it is not an illegal company (defined in code).

When traders begin to find the possibility of doing their business, they are basically discussed from the beginning, as traders and customers ride the same wave. For tax, business purchase is declared as acquisition of assets or promoting sales. In principle, the owner wants to promote his own for various reasons (depending on the company's assets). In the first place, when reselling a promotion, shareholders can earn money from funds because the promotion is considered a serious asset. When resale of assets, non-organic companies (including S-Corporation shareholders) receive ordinary income or income from the similarity of asset assets. Second, in terms of differences in assets, resale promotions have the ability to demand the trader not to transfer company assets and licenses, or to obtain the consent of three.

On the other hand, customers usually want to take part in asset resale and take a step toward building the acquisition of assets. When purchasing a promotion, the customer is transferred without increasing the asset base of the acquired business. However, when acquiring assets, the customer receives the asset cost basis that covers the goodwill from the motivated company (unpleasant cases usually contain zero base), and the customers effectively every year. In order to reduce the promise of customer taxes, you can apply more depreciation deductions. If it has not been discussed, the customer does not observe a collective promise when reselling assets.

Sellers in line with asset resale need to agree with customers on additional taxes for additional taxes that may be covered by traders for asset resale.

There are two additional ways for customers to increase automobile assets. The first is the selection of 338 (H) (10) in cooperation with Article 338, and the second is in cooperation with Article 368 (A) (1) (F), and REVENUE RULING 2008-18 [9] It is an organization reorganization F according to.

Selection of Article 338 (H) (10)

Buyers and merchants select Article 338 (H) (10). With this choice, the purchase of business promotion is evaluated as a resale of assets under the federal income tax law, but is legally evaluated as a promotional resale. 10] Resale is deemed to be a normal asset resale under the Income Tax Law (so customers receive an increase in the number of assets taxation), but merchants do not need to r e-register their assets. Merchant stores do not receive cash due to resale promotion. In this return, it is necessary to split the sale amount between assets based on the fair market price of the asset. The cost paid beyond the fair market price of the company's tangible assets is divided into intangible assets of the company and further divided into business rights. < SPAN>, on the other hand, customers usually want to take a step in retaining asset resale and take a step to build the founding assets. When purchasing a promotion, the customer is transferred without increasing the asset base of the acquired business. However, when acquiring assets, the customer receives the asset cost basis that covers the goodwill from the motivated company (unpleasant cases usually contain zero base), and the customers effectively every year. In order to reduce the promise of customer taxes, you can apply more depreciation deductions. If it has not been discussed, the customer does not observe a collective promise when reselling assets.

Sellers in line with asset resale need to agree with customers on additional taxes for additional taxes that may be covered by traders for asset resale.

1. Selection of Article 338 (H) (10)
2. Sellers in line with asset resale need to agree with customers on additional taxes for additional taxes that may be covered by traders for asset resale.
3. Selection of Article 338 (H) (10)

Buyers and merchants select Article 338 (H) (10). With this choice, the purchase of business promotion is evaluated as a resale of assets under the federal income tax law, but is legally evaluated as a promotional resale. 10] Resale is deemed to be a normal asset resale under the Income Tax Law (so customers receive an increase in the number of assets taxation), but merchants do not need to r e-register their assets. Merchant stores do not receive cash due to resale promotion. In this return, it is necessary to split the sale amount between assets based on the fair market price of the asset. The cost paid beyond the fair market price of the company's tangible assets is divided into intangible assets of the company and further divided into business rights.

The selection of 338 (H) (10) is only possible in the case of "qualified stock purchase". "Equity stock purchase" means that the target corporation is a member or a shareholder of the target corporation for 12 months, and is more than 80%of shares (both voting rights and values). It means the transaction to be acquired (or a series of transactions). [15] If the audit reveals that the target corporation does not actually meet the S-Corporation requirements, the selection of Article 338 will be invalid. If the selection of Article 338 (H) (10) is disabled, the transaction is considered to be a direct sale of the shares, and the buyer cannot receive an increase in the assets of the target company.

The selection of Article 338 (H) (10) is jointly performed by the buyer and the seller in the format of 8023. [17] Shareholders who do not sell shares must also agree to this choice. This choice must be made by the 15th, 9 months after the month to which the acquisition date belongs.

If the target is not certified as S-Corporation (C-Corporation), you can choose to sell the company's shares as a property sale based on Article 336 (e). Such a choice can be made when the target of the parent corporation sells at least 80 % of the target shares. The 336 (E) selection is very similar to the selection of 338 (H) (10), but the buyer does not need to be a company. Please note that transactions that fall under 336 (E) and 338 (H) (10) are considered to be 338 (H) (10).

Impact when selected 338 (H) (10)

According to the function, the subject is considered to be settled after a conditional asset sale. This transaction is considered to be a 100 % taxable acquisition of the assets of the target company under the Income Tax Law. In other words, ta x-exempt transactions, organizational reorganization (transfer, merger, transfer of a controlled company, etc.), or if the seller does not recognize the full amount of profit and loss as a loss received as a result of the transaction, shares can not be obtained.

Problems regarding selection 338 (H) (10)

The 338 choice is a useful way for the buyer to increase the Basis without burdening the seller by r e-registration of ownership and relocating assets, but this choice has the following drawbacks. It is necessary to keep in mind that there is

1. Article 338 The standard is a motivated company, including all shareholders of Company S (regardless of this, regardless of whether they sell their own promotions, do not do). It strongly demands paying taxes to all assets. As a result, the structure of transactions based on delayed tax (that is, when the trader pays taxes only for infinite capita l-related remuneration) is substantially excluded. Traders are actually obliged to pay taxes to all assets of the price company, regardless of the ratio of the sold assets.
2. As a trader, a trader is a part of the transaction based on Article 721 or 351 (when a trader receives capital at a customer, mother, parent, customer company, or a holding company that owns capital of other forms) When relocating 20 % or more on a donalog base, the options give a transaction case with the relocation. Providing more than 20 % of your own funds does not satisfy the claim of "purchase" in cooperation with Article 338, so the selection of Article 338 (H) (10) is invalid. [26]
3. If the S-Corporation selection of an ambitious company is invalid (it is often raised because it is easy to cancel the status of S-Corporation), the selection of 338 (h) (10) is actually invalid. , All excellent qualities provided by this choice will be destroyed. In fact, businesses cannot meet their own warranty by agreeing to the sale.

F organization reorganization

Selection 338 (H) (10) is an alternative to F-REORGANISATION. During the organizational reorganization, traders have the opportunity to move their capital to the Donalog base as it is realized, and that the organization reorganized assets are incorrectly recognized as S corporations. Accept profits only for assets (selection of Article 338 (H) (10)) (H) (H) (10)).

Article 338 Rewards in the form of F < SPAN> 338 The standard of Company S has a minimum of 100 % motivated companies (regardless of this, regardless of whether they sell their own promotion or not). He strongly demands paying taxes to all the assets of motivated companies, including the case. As a result, the structure of transactions based on delayed tax (that is, when the trader pays taxes only for infinite capita l-related remuneration) is substantially excluded. Traders are actually obliged to pay taxes to all assets of the price company, regardless of the ratio of the sold assets.

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As a trader, a trader is a part of the transaction based on Article 721 or 351 (when a trader receives capital at a customer, mother, parent, customer company, or a holding company that owns capital of other forms) When relocating 20 % or more on a donalog base, the options give a transaction case with the relocation. Providing more than 20 % of your own funds does not satisfy the claim of "purchase" in cooperation with Article 338, so the selection of Article 338 (H) (10) is invalid. [26]

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If the S-Corporation selection of an ambitious company is invalid (it is often raised because it is easy to cancel the status of S-Corporation), the selection of 338 (h) (10) is actually invalid. , All excellent qualities provided by this choice will be destroyed. In fact, businesses cannot meet their own warranty by agreeing to the sale.

F organization reorganization

Selection 338 (H) (10) is an alternative to F-REORGANISATION. During the organizational reorganization, traders have the opportunity to move their capital to the Donalog base as it is realized, and that the organization reorganized assets are incorrectly recognized as S corporations. Accept profits only for assets (selection of Article 338 (H) (10)) (H) (H) (10)).

Article 338 organization reorganization in the form of F is the case where all shareholders of Company S (regardless of this, regardless of whether they sell or not), at least 100 % motivated companies. Including, he strongly demands paying taxes to all the motivated companies. As a result, the structure of transactions based on delayed tax (that is, when the trader pays taxes only for infinite capita l-related remuneration) is substantially excluded. Traders are actually obliged to pay taxes to all assets of the price company, regardless of the ratio of the sold assets.

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As a trader, a trader is a part of the transaction based on Article 721 or 351 (when a trader receives capital at a customer, mother, parent, customer company, or a holding company that owns capital of other forms) When relocating 20 % or more on a donalog base, the options give a transaction case with the relocation. Providing more than 20 % of your own funds does not satisfy the claim of "purchase" in cooperation with Article 338, so the selection of Article 338 (H) (10) is invalid. [26]

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If the S-Corporation selection of an ambitious company is invalid (it is often raised because it is easy to cancel the status of S-Corporation), the selection of 338 (h) (10) is actually invalid. , All excellent qualities provided by this choice will be destroyed. In fact, businesses cannot meet their own warranty by agreeing to the sale.

F organization reorganization

Selection 338 (H) (10) is an alternative to F-REORGANISATION. During the organizational reorganization, traders have the opportunity to move their capital to the Donalog base as it is realized, and that the organization reorganized assets are incorrectly recognized as S corporations. Accept profits only for assets (selection of Article 338 (H) (10)) (H) (H) (10)).

Organizational reorganization in the form of F

The first step of the organizational reorganization F is the action of Company S's no n-core organizational reorganization. A motivated S company (hereinafter referred to as "T") will establish a new company (hereinafter referred to as "HOLDCO") and transfer its promotion to HOLDCO to replace the promotion of HOLDCO. As a result of this transaction, shareholders own all Holdco's promotions, and Holdco will have all the promotions of T. Later, Holdco decided to regard T as a qualified subsidiary (QSub) to support S, and performed Co-Shaped Election in the format of 8869. Under the Federal Tax Law, T as a QSub is a no n-ruling company, and T's assets and promises are all considered to be held. In other words, the selection of QSub that T performed is considered to be the selection of Holdco's S Corporation. [30] After that, when Qsub Holdco was established, T would refer to a finite liability company in cooperation with the state law based on ta x-exempt transactions based on no n-dominant organizations to other organizations. But HOLDCO must obtain a personal EIN, but if the EIN has been revealed from the reconstruction, HOLDCO's shareholder is LLC. You can get any opportunity to rebuild.

The direct rebuilding from the S-Corporation to the LLC is considered to be the S-CORPORATION tax liquidation (resale of assets), so it is actually completely taxable for shareholders.

As a candidate, S-Corporation has the option of establishing a fresh LLC, bringing all his own business assets and promises to the fresh LLC instead of Toliki in the LLC, and introducing Toliki into the customer LLC. However, in order to relocate assets, it is necessary to match the three, and in the F-organization restructuring, the same consequences are performed without performing the work that is assumed to be the transfer of rights, such as maintaining the past EIN S corporation. You can get.

The first step in the excellent point of the F-organization reorganization < Span> The first step in the organization r e-edition F is the action of S Company Snight Core Organization. A motivated S company (hereinafter referred to as "T") will establish a new company (hereinafter referred to as "HOLDCO") and transfer its promotion to HOLDCO to replace the promotion of HOLDCO. As a result of this transaction, shareholders own all Holdco's promotions, and Holdco will have all the promotions of T. Later, Holdco decided to regard T as a qualified subsidiary (QSub) to support S, and performed Co-Shaped Election in the format of 8869. Under the Federal Tax Law, T as a QSub is a no n-ruling company, and T's assets and promises are all considered to be held. In other words, the selection of QSub that T performed is considered to be the selection of Holdco's S Corporation. [30] After that, when Qsub Holdco was established, T would refer to a finite liability company in cooperation with the state law based on ta x-exempt transactions based on no n-dominant organizations to other organizations. But HOLDCO must obtain an individual EIN, but if the EIN is the EIN that has been expired from the reconstruction, LLC shareholders will be LLC. You can get any opportunity to rebuild.

The direct rebuilding from the S-Corporation to the LLC is considered to be the S-CORPORATION tax liquidation (resale of assets), so it is actually completely taxable for shareholders.

As a candidate, S-Corporation has the option of establishing a fresh LLC, bringing all his own business assets and promises to the fresh LLC instead of Toliki in the LLC, and introducing Toliki into the customer LLC. However, in order to relocate assets, it is necessary to match the three, and in the F-organization restructuring, the same consequences are performed without performing the work that is assumed to be the transfer of rights, such as maintaining the past EIN S corporation. You can get.

The first step of the excellent point of the f-organization reorganization F is the action of Company S's no n-core organizational reorganization. A motivated S company (hereinafter referred to as "T") will establish a new company (hereinafter referred to as "HOLDCO") and transfer its promotion to HOLDCO to replace the promotion of HOLDCO. As a result of this transaction, shareholders own all Holdco's promotions, and Holdco will have all the promotions of T. Later, Holdco decided to regard T as a qualified subsidiary (QSub) to support S, and performed Co-Shaped Election in the format of 8869. Under the Federal Tax Law, T as a QSub is a no n-ruling company, and T's assets and promises are all considered to be held. In other words, the selection of QSub that T performed is considered to be the selection of Holdco's S Corporation. [30] After that, when Qsub Holdco was established, T would refer to a finite liability company in cooperation with the state law based on ta x-exempt transactions based on no n-dominant organizations to other organizations. But HOLDCO must obtain a personal EIN, but if the EIN has been revealed from the reconstruction, HOLDCO's shareholder is LLC. You can get any opportunity to rebuild.

The direct rebuilding from the S-Corporation to the LLC is considered to be the S-CORPORATION tax liquidation (resale of assets), so it is actually completely taxable for shareholders.

As a candidate, S-Corporation has the option of establishing a fresh LLC, bringing all his own business assets and promises to the fresh LLC instead of Toliki in the LLC, and introducing Toliki into the customer LLC. However, in order to relocate assets, it is necessary to match the three, and in the F-organization restructuring, the same consequences are performed without performing the work that is assumed to be the transfer of rights, such as maintaining the past EIN S corporation. You can get.

The excellent point of the F-organization reorganization

F-Reorganization is an effective way to avoid tasks formed when selecting 338 (H) (10):

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