Discussion:Merger Reporting Requirement
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| {{ForumReplyPost|UserID=Smktax|Date=30 July 2009|Text=I agree that the merger may qualify as a section 351 exchange, but only if the former owners of the LLC control the corporation.}} | {{ForumReplyPost|UserID=Smktax|Date=30 July 2009|Text=I agree that the merger may qualify as a section 351 exchange, but only if the former owners of the LLC control the corporation.}} | ||
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| + | {{ForumReplyPost|UserID=Chase|Date=30 July 2009|Text=Back in the office now -- seems to me that the Merger Agreement should not have stated that this was a "tax-free reorganization under 368(a)(1)(F)" since as Riley points out.....it is not 2 corporations which merged. According to the merger docs, the effect of the merger was that the LLC would cease to exist and the C Corporation into which the LLC was merged would survive and that the C Corporation would continue to all of the assets, debts, and liabilities of the former LLC. At this point it seems that this is an Assets Over Form (which is how a state formless conversion is characterized). | ||
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| + | According to the merger docs, the LLC units owned by the members were converted into and exchanged for a share of common stock in the C Corporation. Does this change the merger from an assets over form to an interest over form? If it does change it to an interests over, I believe, based on the fact that the merger appears to meet the 351 requirements, that it is still tax free -- maybe not according to 368(a)(1)(F) but tax-free nevertheless. | ||
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| + | In either case, what type of statement should be attached to the final 1065 and the 1040's of the former LLC members, if any? | ||
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| + | Thanks!}} | ||
Current revision
Discussion Forum Index --> Tax Questions --> Merger Reporting Requirement
| 4 August 2006 | |
| What is the mechanics of reporting two corporations merging on the federal return where one Corp continues to operate and the other dissapears? On Form 100 for CA, there is a "Merger/Reorganized" box available to check. However, no such box is available on Form 1120 or on Form 966. Thank you. | |
| 30 July 2009 | |
| Do the disclosure statements at 1.368 also apply to an LLC (taxed as partnership) which merged into a C Corporation?
Is the 1.368-3(a) required to be attached to the final 1065 while the partners will attach a 1.368(b) to their 2009 tax returns, the year in which the merger occurred? | |
| 30 July 2009 | |
| No, because the merger of a partnership into a corporation would not be a tax free reorganization under section 368(a). | |
| 30 July 2009 | |
| Actually not in my office at the moment to double check the merger agreement but this was a merger per 368(a)(1)(F) according to the legal docs I have seen whereby the assets were contributed to the C Corporation (limited liabilities) and the members interests in the LLC were converted to common stock on a pro rata basis according to the members interest in the LLC. Not a taxable transaction.
In this case, any disclosures needed or just check box on the 1065 as a final return ?? | |
| 30 July 2009 | |
| Should re-state the wording above ... when I wrote "limited liabilities" I meant liabilities were immaterial compared to the assets transferred over. Thx | |
| 30 July 2009 | |
| If this is a type F reorganization, this implies that the LLC was taxed as a corporation, which is not really the case here.
It sounds more likely that the LLC went through an interspecies merger under state law (e.g. Cal Corp Code 17552). This would be ordinarily be nontaxable under Internal Revenue Code § 351. My answer would change if the LLC was the surviving entity. | |
| 30 July 2009 | |
| I agree that the merger may qualify as a section 351 exchange, but only if the former owners of the LLC control the corporation. | |
| 30 July 2009 | |
| Back in the office now -- seems to me that the Merger Agreement should not have stated that this was a "tax-free reorganization under 368(a)(1)(F)" since as Riley points out.....it is not 2 corporations which merged. According to the merger docs, the effect of the merger was that the LLC would cease to exist and the C Corporation into which the LLC was merged would survive and that the C Corporation would continue to all of the assets, debts, and liabilities of the former LLC. At this point it seems that this is an Assets Over Form (which is how a state formless conversion is characterized).
According to the merger docs, the LLC units owned by the members were converted into and exchanged for a share of common stock in the C Corporation. Does this change the merger from an assets over form to an interest over form? If it does change it to an interests over, I believe, based on the fact that the merger appears to meet the 351 requirements, that it is still tax free -- maybe not according to 368(a)(1)(F) but tax-free nevertheless. In either case, what type of statement should be attached to the final 1065 and the 1040's of the former LLC members, if any? Thanks! | |
