Enabling the sale of an LLC interest as opposed to S corporation stock. Performing an F Reorganization prior to the sale of a business owned by an S corporation can enable the seller to sell a subsidiary single member LLC interest, not the corporate stock directly.

What is an F reorganization?

F reorganization defined. Sec. 368(a)(1)(F) provides that an F reorganization is a mere change in identity, form, or place of organization of one corporation, however effected. Although the definition of an F reorganization seems short and simple, it does leave ambiguity as to the specific requirements.

Is the organizer of an LLC the owner?

Members are generally considered to be the owners of the LLC, and they may split ownership interests – learn all about LLC’s here. The organizer is simply a designated person who is responsible for filing a limited liability company’s formation paperwork with the state.

What is a tax-free reorganization?

Certain types of corporate acquisitions, divisions, and other restructurings which are generally not taxable at the corporate or stockholder level. The transaction must meet strict statutory and non-statutory requirements (see IRC § 368 and Treasury Regulations ).

Is a name change an F reorganization?

As indicated in Sec. 368, an F reorganization may be effected by changing the identity, form, or place of organization of a corporation. Thus, a change in the name of a corporation could qualify as an F reorganization.

What’s the best way to start a company reorganization?

But planning and communication are key—start your company reorganization process early, get everyone involved, and stay organized by creating an org chart that can guide your company to a greater, more efficient organizational structure. Reorganize your company and plan for the future in Lucidchart.

What are the steps to starting a LLC?

Starting an LLC is a simple process, but requires a set of steps and filings that vary for each of the 50 states. To help you through the steps of the process, you can use a business start-up guide for starting an LLC in your preferred state.

Is it common for upper management to reorganize the entire company?

In fact, it’s not uncommon for upper management to reorganize the entire company on paper with only perfunctory input from HR, issue an announcement about the reorganization in a company-wide meeting or email, and then, when panic and confusion ensues, act confused and indignant about their employees’ reactions.

How to choose a name for a LLC?

Choose a Name for Your Limited Liability Company The next step to starting an LLC is that of choosing and reserving a name for your business. Select a company name that represents your business and also complies with your state’s guidelines for naming LLCs. Some states, for example, prohibit the use of words like “corporation” and “incorporated”.