Originally Posted by VProjects
My main concern you answered, as I was wondering about do I trigger a tax event by the LLC purchasing the C Corp stock with new stock stock.
> basically, it is vital for the corp lawyer to consult a tax lawyer at every stage of an acquisition transaction.only if the price being paid by Acquiring is all cash, the transaction can only be a taxable transaction.hjowever, when even a portion of the price being paid by Acquiring is stock of Acquiring, then it may be possible to structure the transaction as a tax-free reorganization in which Shareholders are not taxed on the receipt of Acquiring stock. In order for a tax-free reorganization to be possible, at least 40% of the value of the total consideration paid to Shareholders must be in the form of stock of Acquiring ;In other words, the nonstock consideration, referred to as “boot”, cannot exceed 60% of the total consideration. If the boot will exceed 60%, there cannot be a tax-free reorganization.
Also, a reorganization requires that Target be a corp for tax purposes.so unless the Target is a corp,either c cor S corp I guess, a tax free reorganization involving the acquisition of the partnership is not possible. It is also not possible for any party to transfer assets to a new or existing corporate Target, and then, as part of the same plan, for those assets to be part of a tax-free reorganization in which Acquiring acquires Target.
Finally, a reorganization might not be practicable if Target will retain a substantial amount of assets that will be transferred to the Shareholders rather than to Acquiring. While some types of reorganizations would permit Target to transfer some of its assets to the Shareholders before Target is acquired, such a transfer would generally be taxable to both Target and the Shareholders.
plz contact tax attroney for more info in detail