Determining Basis in Tax-Free Acquisitions.

The article focuses on the rules of the U.S. Internal Revenue Service (IRS) on determination basis for tax-free asset and stock acquisitions. It cites the requirements of Section 368 on type B reorganization or stock-for-stock and reverse triangular merger. Under Section 362(b), the buyer must use the same basis in determining the target stock in a type B reorganization as that of the target shareholders in their target stock. IRS has released the Revised Proclamation 81-70 and the Notice 2009-4 to provide guidelines for determining stock basis.