Regulations finalize rules on all cash D reorganizations
On Monday, the IRS finalized temporary regulations regarding the determination of the basis of stock or securities in all-cash D reorganizations where no stock or securities of the issuing corporation is issued and distributed in the transaction (T.D. 9702). The regulations clarify that in these transactions, only a shareholder that owns actual shares of the issuing corporation will be able to designate the issuing corporation’s share of stock to which the basis (if any) of the stock or securities surrendered will attach.
Under Sec. 368(a)(1)(D), a D reorganization generally occurs when one corporation transfers all or a part of its assets to another corporation if, immediately after the transfer, the target corporation or one or more of its shareholders, or any combination of those, is in control of the acquiring corporation. Read more on the Journal of Accountancy.