The “F reorganization” has become the tax planning structuring technique of choice in today’s middle market M&A world. So, what does it mean to you as a seller?
First, F reorganization is only applicable in the context of corporations not LLCs. Second, in the middle market M&A world, which is still controlled by S corporation’s seller target, it means legally converting your existing S corporation to an LLC before selling.
The basic conversion process should be tax-free and it generally consists of the following sequence of steps:
Step 1: Form a new corporation hereafter referred to as “HoldCo”.
Step 2: All the S …read more
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