IRS Issues Rules on Basis Allocation in All Cash D Reorganizations

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IRS unveils proposed, final, and temporary rules (REG-101273-10, T.D. 9558) to prevent the inappropriate allocation of basis by those who do not actually own stock in transactions known as “all cash D” reorganizations. The guidance deals with determining the basis of stock or securities in a reorganization where no stock or securities are issued and distributed in the transaction. IRS says only shareholders who actually own stock in the issuing corporation will be able to designate the share of issuing corporation stock that will attach to the basis, if any, of the surrendered stock or securities.