Demystifying International Tax-Free Reorganization, Divisions, and Mergers and Acquisitions
By Anthony Diosdi The Internal Revenue Code provides for nonrecognition of gain or loss realized in connection with a considerable number of corporate organizational changes. These include acquisitive and other reorganization defined in Internal Revenue Code Section 368(a)(1) and divisive reorganizations under Internal Revenue Code Section 355. They are permitted on a tax-free basis on the rationale that they involve a change in the organizational form of the conduct of the business and that there should be no tax penalty imposed on such a change. Equally important in the context of international reorganizations and merger transactions is Internal Revenue Code Section 367. Instead, this article will focus on Sections 368 and 355 of the Internal Revenue Code. This article will not discuss Section 367. However, we have written extensively on…