Tax-Free Reorganizations

A Tax-Free Reorganization is a merger or acquisition in which the seller of stock does not incur any tax obligations. In order to avoid tax obligations, there are various statutory requirements that must be complied with. Generally, the seller will receive stock in the new entity. However, while the use of a Tax-Free Reorganization avoids taxes at the time of the transaction, it may only be a deferral and taxes will usually be paid upon the sale of the stock received.