2013-09-09
Below are three new situational charts regarding the treatment of S corporation elections and QSub elections as a result of "F" reorganizations. The first chart is Rev. Rul. 64-250, where the merger of an S corporation into a newly formed out of state corporation was treated as an “F” reorganization. The new corporation was treated as a continuation of the original, and therefore the “S” election did not terminate.
The second chart is Rev. Rul. 2004-85, where an S corporation with a QSub merged into a newly formed out of state corporation in an "F" reorganization. Citing Rev. Rul 64-250, the "S" election remained in effect, and therefore the election to treat its subsidiary as a QSub did not terminate.
Lastly, PLR 201007043 involved an S Corporation merging downstream into one of its QSubs. The private letter ruling held that the merger should be treated as an "F" reorganization, and citing the above revenue rulings, the "S" election and the QSub election remained in effect.
The charts can be viewed as PDF files here: Rev. Rul 64-250, Rev. Rul. 2004-85, PLR 201007043.
