F Reorganizations: The Good, the Bad, and the Wasteful

October 17, 2022Article
Tax Notes Federal

Corporate & Tax attorneys Zachary M. Nolan, Michael Wiener, and Warren "Skip" Kessler published "F Reorganizations: The Good, the Bad, and the Wasteful" in Tax Notes Federal (Volume 177, Number 3) on October 17, 2022. 


F reorganizations, much like the game of Othello, can take a minute to learn but a lifetime to master. They are often a critical part of structuring the purchase and sale of S corporations. As part of an F reorganization, a target S corporation will file an IRS election to be treated as a qualified subchapter S subsidiary, or a QSub. While making a QSub election has become standard practice in F reorganizations involving S corporations, few practitioners have stopped to ask whether it is required in order to have an effective F reorganization. We explain why a QSub election isn’t necessary to have a valid F reorganization.