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IRS PLR: Dissolution in One State, Reclassification Won’t Preclude Business’s Reincorporation, Reorganization in Another State nor Result in Liquidation (IRC §331)

July 31, 2020, 5:00 AM

A business’s dissolution in its state of incorporation (“A”), together with an entity classification election relating to its domestication in another state (“B”), won’t preclude the transition of Taxpayer’s legal form of organization nor its reincorporation in a third state (“C”) and won’t result in a taxable liquidation, the IRS ruled. Taxpayer discovered that State A law didn’t permit State A corporations to domesticate to another State, thus it inadvertently wasn’t incorporated in either State A or State B as of the dissolution date, prompting it to incorporate in State C as a partial remedy. According to the representation, Taxpayer...

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