Abstract: Under the Internal Revenue Code ("Code"), a merger that is "statutory," or conducted pursuant to the corporation laws of a state, is tax-free. Practically since its inception, this provision has invited abuse. Taxpayers have sought refuge behind liberal state merger laws, while the Internal Revenue Service ("Service") and the courts have strained to preserve the integrity of the statutory merger concept. The latest such episode surrounds the invention of something called a "divisive merger." This oxymoron describes a transaction in which more than one party may survive or be created while still meeting the definition of a "merger" under state law. If it qualifies under the Code, it permits a mere sale to receive the favored status of a tax-free reorganization.
Publication Year: 2000
Publication Date: 2000-01-01
Language: en
Type: article
Indexed In: ['crossref']
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