March 08, 2019 The Tax Lawyer

Asset Basis in Acquisitive Reorganizations: General Utilities Hangover

Vol. 72, No. 2 - Winter 2019

David Hasen

Abstract

     The rules that govern the tax basis and, by extension, the holding period of property received by an acquired corporation in an acquisitive reorganization are an unlovely patchwork that emerged from major changes to the tax law in 1986 and 1988. These rules not only fail to provide clarity; they also do not reflect the fact that the acquired corporation, to the extent it engages in post-reorganization activity pursuant to the overall plan of reorganization, is in substance the agent of the acquiring corporation. Congress should amend the reorganization provisions to reflect this circumstance.

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