IRS PLR: Acquisition Steps Qualify for Corporate Reorganization Nonrecognition of Gain or Loss (IRC §368)

July 16, 2021, 5:00 AM

Seven steps in a worldwide corporate group parent’s (“Taxpayer”) indirect acquisition of a foreign target company will be treated as occurring in pursuance of a plan of reorganization as required by Treasury Regulations Section 1.368-1(c), the IRS ruled. The steps involve disregarded entities, a foreign subsidiary, establishment of new branches in multiple foreign countries, liquidating transfers of Target’s business, and Target’s dissolution or election to be classified as a disregarded entity. Target’s line of business (one of three that Taxpayer conducts) is heavily regulated and has seen significant global growth which is expected to continue, according to the ...

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