tax-free reorganization

tax-free reorganization
Certain types of corporate acquisitions, divisions, and other restructurings which are generally not taxable at the corporate or shareholder level. The transaction must meet strict statutory and nonstatutory requirements (See IRC § 368 and Treasury Regulations). To qualify as a tax-free reorganization, stock of the buyer (or buyer's affiliate) generally must be used as a significant portion (in some cases all) of the consideration. The basis of stock or assets received in a tax-free reorganization generally is a carryover basis. If consideration other than qualifying stock is received by a selling shareholder (often referred to as "boot"), the shareholders generally are taxed on the receipt of the boot.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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