FROM THE OFFICE OF PUBLIC AFFAIRS
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March 9, 2005
JS-2301
Treasury and IRS Issue Regulations
on Insolvent Reorganizations
Today the Treasury Department and the Internal Revenue Service issued proposed regulations regarding the circumstances in which an insolvent corporation may engage in a tax-free reorganization. The proposed regulations generally provide that a transaction can qualify as a tax-free asset reorganization only if the target corporation transfers property with net value to the acquiring corporation. The proposed regulations also provide similar rules for tax-free stock reorganizations, tax-free liquidations, and tax-free incorporations.
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