IRS Issues Rules Defining Acquiring Corporation in Section 381 Deals

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The Internal Revenue Service issued proposed regulations (REG-131239-13) modifying the definition of an acquiring corporation under tax code Section 381 with regard to certain assets in reorganizations.
The proposed rules released May 6 would provide that, in a transaction described in Section 381(a)(2), the acquiring corporation is the corporation that directly acquires the assets transferred by the transferor corporation.
This would be the case even if the transferee ultimately retains none of the transferred assets, the IRS said in the preamble to the proposed rules.