other structures. Moreover, like taxable asset acquisitions, the "C" reorganization can be mechanically complex, costly, and time consuming. Hence, "C" reorganizations are rare. Exhibit 3.3 Comparison of Section 368 Tax-Free Structures – Structure Advantages Disadvantages Flexibility in the form of All target's liabilities assumed Statutory consideration (no voting Acquirer and target Merger or stock requirement; up to 60% shareholders may be entitled Consolidation boot can be used) to voting and appraisal rights Tax-free status not affected Transfer of titles, leases, and by disposal of unwanted contracts may be necessary assets Neither company can be a Eliminates minority or foreign corporation dissenting shareholders Forward May lose non-transferrable Flexibility in the form of Triangular assets and contracts consideration Merger "Substantially all" Target's liabilities isolated in requirement a subsidiary Target shareholder vote Reverse Up to 20% boot can be used Acquirer must exchange its Target's liabilities isolated is voting stock for target stock Triangular Merger a subsidiary "Substantially all" Non-transferrable assets and requirement contracts are not lost Target shareholder vote "B" Acquirer must exchange Target's liabilities isolated in Reorganization its for target votingstock a subsidiary stock Non-transferrable assets and Inflexible with respect to the contracts are not lost form of consideration No "substantially all" Minority shareholders not requirement eliminated "C" Acquirer can be selective in Acquirer must exchange choosing the liabilities it its for target Reorganization votingstock assumes stock Inflexible with respect to the form of consideration "Substantially all" requirement
other structures. Moreover, like taxable asset acquisitions, the "C" reorganization can be mechanically complex, costly, and time consuming. Hence, "C" reorganizations are rare. Exhibit 3.3 – Comparison of Section 368 Tax-Free Structures Structure Advantages Disadvantages Statutory Merger or Consolidation Flexibility in the form of consideration (no voting stock requirement; up to 60% boot can be used) Tax-free status not affected by disposal of unwanted assets Eliminates minority or dissenting shareholders All target's liabilities assumed Acquirer and target shareholders may be entitled to voting and appraisal rights Transfer of titles, leases, and contracts may be necessary Neither company can be a foreign corporation Forward Triangular Merger Flexibility in the form of consideration Target's liabilities isolated in a subsidiary May lose non-transferrable assets and contracts "Substantially all" requirement Target shareholder vote Reverse Triangular Merger Up to 20% boot can be used Target's liabilities isolated is a subsidiary Non-transferrable assets and contracts are not lost Acquirer must exchange its voting stock for target stock "Substantially all" requirement Target shareholder vote "B" Reorganization Target's liabilities isolated in a subsidiary Non-transferrable assets and contracts are not lost No "substantially all" requirement Acquirer must exchange its votingstock for target stock Inflexible with respect to the form of consideration Minority shareholders not eliminated "C" Reorganization Acquirer can be selective in choosing the liabilities it assumes Acquirer must exchange its votingstock for target stock Inflexible with respect to the form of consideration "Substantially all" requirement
Captive_Wind-Up_Taxation_-_Using_IRC_368_and_IRC_351To_Defer_Gain_on_Stock_in_Captive_Sale__Wind-Up_or_Captive_R.docx