Tax Free Transactions, US Corp with Foreign Parent

Technical topics regarding tax preparation.
#1
kjwcpa  
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24-Mar-2022 11:21am
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Pasadena, CA
I have a client whom I file a C-Corp return for here in the United States. This company is owned by a UK Company which acts as a holding company. This UK parent holding company owns ten separate corporations, nine of which are UK corporations and one of which is a US corporation (my client). In 2021, a new C-Corp entity (NewCo) was established in the United States, wholly owned by the C-Corp already established in the United States (my original client). Is there a tax-free means of altering the structure so that the NewCo can be owned by one of the UK HoldCo's other nine UK based corporations?

The interplay of the typical tax free exchange/reorganization sections and 367 is difficult for me to muddy through.

Thanks!
 

#2
MilesR  
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726
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7-Dec-2021 11:10pm
Location:
California
I'm not a specialist in M&A by any means, but maybe a reverse triangular merger would be a tax-free way to get NewCo acquired and retained as a US sub of one of the UK co's.

One of the UK subs would essentially form a new US subsidiary (NewerCo), then NewerCo buys/merges with NewCo, NewerCo dissolves and distributes NewCo stock to the UK co sub.
 


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