Client Services / Tax / Tax - Acquisitions & Restructurings

Tax - Acquisitions & Restructurings

Our Acquisitions/Restructurings Group represents clients on the U.S. federal, state and local tax aspects of structuring U.S. and international mergers and acquisitions, corporate reorganizations (including spin-offs and split-offs), liquidations and stock and other asset sales and distributions. We work closely with our Firm’s corporate lawyers to help structure transactions in a manner that is most tax-efficient for all parties involved. In addition, our lawyers often work as special tax counsel on transactions, which are particularly tax sensitive or otherwise involve "cutting edge" tax issues.

We have a long history of representing clients before the Internal Revenue Service National Office in obtaining private letter rulings with respect to particular transactions. The group has among its members a number of former IRS rulings officials whose background and insight have proven to be critical to procuring a response from the IRS that is both favorable and timely. The group has also represented clients before the U.S. Treasury Department with respect to regulatory matters and has been instrumental in influencing pending regulations projects.

TAXABLE TRANSACTIONS
In today’s tax environment, there are no "run-of-the-mill" or "garden variety" merger and acquisition transactions. In a transaction that is structured as a taxable asset sale (including many merger transactions), our lawyers work with buyers in formulating a purchase price allocation that results in the fastest write-off for tax purposes, and works with sellers, where appropriate, in maximizing the capital gain and minimizing the ordinary income that otherwise results from the transaction. In a taxable stock sale, we assist buyers in calculating the "tax cost" of purchasing stock and in analyzing the tax attributes (e.g., net operating loss carryovers) of the purchased entity. We also advise buyers on which form of entity—C corporation, S corporation, partnership, limited partnership or limited liability company—represents the best vehicle for the acquisition.

TAX-FREE TRANSACTIONS
For many of our clients—primarily those that are publicly traded—acquisitions often will take the form of tax-free reorganization transactions. Here, we assist both buyers and sellers in maneuvering through the intricate sets of tax rules that apply to transactions that qualify as tax-free under the Internal Revenue Code. Where appropriate, we seek private letter rulings or issue tax opinions with respect to a transaction. We also assist corporate lawyers in drafting tax representations and tax-sharing agreements.

Our lawyers also have significant experience in structuring the increasingly popular tax-free spin-off and split-off form of transaction, and have designed some of the largest transactions of this type in recent years. In addition, we have been involved in the structuring of a number of large taxable spin-off transactions, where the objective has been to fall outside the tax-free reorganization provisions in order to permit the current recognition of losses. In both, the tax structuring has proven to be critical to achieving the stated goals for the transaction.

TAX DUE DILIGENCE
Our lawyers work with buyers in conducting tax due diligence with respect to a particular acquisition candidate. In all merger and stock purchase transactions, buyers need to be concerned about the tax history of the purchased entity, and, in the case of an acquisition out of a consolidated group, the tax history of that consolidated group. We help buyers analyze that tax history and, where appropriate, secure additional representations, warranties and indemnities from the sellers.

Contacts

Tax Client Services

McDermott Will & Emery

McDermott Will and Emery