Has anyone gone through an F REORG restructuring for an acquisition?

searcher profile

February 11, 2025

by a searcher from Brigham Young University in Provo, UT, USA

I'm acquiring a business structured as an LLC taxed as an S corp. We’re planning an F reorganization to transition it into a standard LLC taxed as a partnership. After closing, we intend to sell the business’s equipment immediately but want to avoid the heavy tax burden that typically comes with selling assets. At the same time, we need to maintain the company’s existing safety certifications, EIN, bank accounts, etc.

From what I understand, this structure is considered an equity sale but is taxed as an asset sale, which should allow us to avoid the immediate tax hit when selling the equipment. Can anyone confirm if this is correct?

Also, if you’ve worked with a great lawyer on a similar restructuring, I’d appreciate any recommendations. Thanks!

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commentor profile
Reply by a professional
from Dartmouth College in Los Angeles, CA, USA
The options mentioned by Riggs are probably fine for smaller deals as long as they have a dedicated tax lawyer. There are some obscure partnership tax provisions that can be triggered depending on the age of the business with F-reorgs, so I would avoid corporate lawyers opining on F-reorgs. They can be a snake pit.
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Reply by a professional
from University of Virginia in Holmes, NY 12531, USA
Hi, Brandon, just actually had a deal close last week - w/ two terrific searchers from this community - that entailed a pre-purchase F-reorg of the target, and have done several other deals on point. Would be glad to chat. Please feel free to get me at redacted
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