Recapitalization

Recapitalization

Recapitalization means:
revision of the capital structure of a corporation, often in a tax- free manner. Examples of recapitalization include exchanging preferred stock for common stock, preferred stock for preferred stock, bonds for stock, and bonds for bonds. An exchange of stock for bonds does not qualify for tax-free treatment, however, because the receipt of bonds is considered to be taxable boot. Former IRC (check if this IRC provision is current here) §368(a)(l)(E).


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