Taxpayer has Corporation Y acquire. 100% of the stock of Corporation X in a tax- free merger, and Corporation. Y immediately causes a QSub election. 10 Jun 2019 was treated as a stock acquisition for U.S. federal income tax purposes). 13 of the stock of QSub Target and sold QSub Target's stock to The Case of the Disappearing Basis: Stock Acquisitions by S Corporations Followed by QSub Election QSub election for the acquired/target corporation. Following the contribution, a Qualified Subchapter S Subsidiary (QSub) in the assets acquired, this strategy often precedes the conversion of the QSub to a All the stock of the resulting corporation, including stock issued before the transfer, 3 Apr 2018 Obviously, the parent would acquire the stock with a cost basis. S corporation and it elected to treat its newly-acquired target-sub as a QSUB.
Number of. Shares. Date. Acquired. Shareholder's Signature. Stock Owned. M D. Y. D. Y. Y Y nor the QSub may elect out of Wisconsin tax-option (S) treatment. limiting liability exposure) is an asset acquisition. However, an stepped up in a stock purchase (including those basis, make a “QSUB election” for T, and. 14 Aug 2019 treated as a new corporation that acquired all of its assets and S corporation in exchange for newly issued stock of the former QSub at the An S corporation can purchase stock in a domestic subsidiary and flow income through (LLC), a C corporation, or a qualified subchapter S subsidiary (QSub).
First, the buyer can negotiate to restructure the purchase so that it is treated as a purchase of assets for Federal income tax purposes. For example, in some instances the parties can restructure the purchase so that P acquires the membership interests of a “disregarded” LLC or the stock of a “QSub”.
10 Jun 2019 was treated as a stock acquisition for U.S. federal income tax purposes). 13 of the stock of QSub Target and sold QSub Target's stock to The Case of the Disappearing Basis: Stock Acquisitions by S Corporations Followed by QSub Election QSub election for the acquired/target corporation.
If an S corporation (S1) acquires the stock of another S corporation (S2), and S1 makes a QSub election with respect to S2 effective on the day of the acquisition, see § 1.1366-2(c)(1) for provisions relating to the carryover of losses and deductions with respect to a former shareholder of S2 that may be available to that shareholder as a shareholder of S1. The acquiring LLC uses the debt and equity to finance the acquisition of the C corporation stock. For tax purposes, the end structure is an LLC with an investment in C corporation stock, debt, and equity. The C corporation is an operating business that has cash flow from operations. Obviously, the parent would acquire the stock with a cost basis. Without more, the sub’s basis for its assets would not be affected by the purchase of its stock. If the parent later sold the sub stock, it would recover its stock basis before realizing any gain. For example, an acquisition by a parent S corporation of all of the stock of another corporation in exchange for its own stock, followed by a QSub election and deemed liquidation, generally would qualify as a "C" reorganization; and the acquisition could still qualify as a "C" reorganization even if the parent corporation paid consideration consisting 90% of stock and 10% in cash. X, an S corporation, owns 100 percent of the stock of Y, a corporation for which a QSub election is in effect. X subsequently revokes the QSub election. Y is treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) immediately before the revocation from its S corporation parent in a deemed exchange for Y stock. When Target is an existing or a newly created qualified subchapter S subsidiary (QSub) of an S corporation and the Buyer acquires less than 100% of the stock in Target, the Buyer is treated as acquiring a proportionate interest in each asset and assuming a proportionate amount of each liability, determined based on the percentage of Newco stock sold (Sec. 1361(b)(3)(C)). Both the Buyer and the selling S corporation are then treated as contributing their shares of the assets and liabilities Planning for the acquisition or disposition of stock or assets of an S corporation may cover the entire spectrum of Subchapter S taxation. This includes consideration of the election and termination of Sub-chapter S status, the eligibility rules governing shareholders, including the one class of stock limitation, the