August 31, 2012 The Tax Lawyer

Cross Species Conversions and Mergers

Vol. 65, No. 3 - Spring 2012

John B. Truskowski

Abstract

    The adoption by many states of both conversion statutes—statutes allowing one form of business organization, such as a limited liability company, to convert to another form of business organization—for example, a corporation—by simply filing a form with the appropriate state office—and cross specie merger statutes—statutes allowing one form of business organization to merge with another form of business organization, such as a limited liability company with a corporation—raises issues on how these conversions or mergers will be treated for federal income tax purposes. Parts I and II of this Article summarize these tax consequences, and Part III discusses in more detail some specific tax issues.

    This Article only considers limited liability companies (LLCs) with more than one member that are classified as partnerships for federal income tax purposes. However, to match the terminology used in the Code, Regulations, rulings, and cases, this Article will generally refer to “partnerships” and “partners” rather than “LLCs” and “members.”

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