Tax Considerations

What this video covers

• What boot is (any non-stock consideration), why it is immediately taxable to the seller, and why tax deferral only applies to the stock portion of reorganizations
• The four continuity tests for tax-free treatment: continuity of ownership interest, continuity of business enterprise, valid business purpose, and step-transaction compliance
• Why Type B reorganizations allow only voting stock with zero cash permitted, while Type C permits boot relaxation up to 20% non-voting consideration
• How the reverse triangular merger works (target survives as wholly owned subsidiary), why it requires 80% or more acquirer voting stock, and why it is the most common modern M&A structure
• The critical distinction that target survival does not automatically bypass change-of-control consent clauses in individual contracts
• What a Type E recapitalization is and how it functions as a restructuring tool: debt-for-equity swaps, equity-for-debt exchanges, and leveraged recap dividends
• The stock-sale-treated-as-asset-sale election: who can use it (S-corporations and consolidated-group subsidiaries only, never standalone C-corporations), the stepped-up basis benefit, and the double-taxation trap
• Why all-stock consideration is not automatically tax-deferred unless the transaction is specifically structured to pass reorganization continuity tests