Discussion:Tax free exchange from LLC to a public company
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Discussion Forum Index --> Advanced Tax Questions --> Tax free exchange from LLC to a public company
Discussion Forum Index --> Tax Questions --> Tax free exchange from LLC to a public company
| 2 July 2009 | |
| The question is whether anyone has any insight on doing a tax free exchange of member interests in an LLC into a public company. The norm is a stock for stock exchange. All aspects of continuity of business and interests are in place as this is a 100% acquisition of the ownership interests of the LLC. Still researching, but haven't found the support I want as of yet. Any help??? | |
| 2 July 2009 | |
| would an election to tax the LLC as a corporation first help? | |
Southparkcpa (talk|edits) said: | 3 July 2009 |
| I was party to a transaction like this about 6 years ago. A foreign corp wanted to buy my clients business (an LLC, taxed as a partnership), we revoked the partenrship election and beagn taxation as a C corp, operated as a C corp and then did a stock swap tax free. We received an opinion letter from a big law firm. I can't adddress your point directly BUT I believe Kevins point is on target. I did about an hours or so research or so and when coupled with the legal letter, I felt comfortable. | |
| 3 July 2009 | |
| See Rev. Rul. 70-140. The section 351 exchange on the conversion to corporate status may not qualify as a 351 exchange. | |
Southparkcpa (talk|edits) said: | 3 July 2009 |
| Smokey
NICE POST! I read 70-140 and it states that the lack of control after the transfer voids the tax free treatment of 351. makes sense. I then reviewed the transaction I was party to and in fact my client SOLD his stock to the new company , did not do a transfer. Appears that the exchange must be unrelated to the 351/368.
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RoyDaleOne (talk|edits) said: | 3 July 2009 |
| 70-140 covers a pre-planned course of action between the buyer and the seller. The pre-agreement results in a couple of available avenues for the IRS challenge the taxpayer's position. | |
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