Legal Definitions - F reorganization

An F reorganization is a specific type of corporate restructuring recognized under U.S. tax law, primarily defined in Section 368(a)(1)(F) of the Internal Revenue Code. It refers to a mere change in identity, form, or place of organization of a single corporation. Essentially, an F reorganization allows a company to change its legal wrapper or address without altering its fundamental business operations, assets, or ownership. The key characteristic is that the same business continues uninterrupted, owned by the same people, but under a slightly different legal structure or in a different jurisdiction. This type of reorganization is generally treated as a tax-free event.

Here are a few examples to illustrate this concept:

• Reincorporating in a New State: Imagine "Coastal Software Inc.," a corporation originally formed in California, decides to reincorporate in Delaware. This move is often made to take advantage of Delaware's well-established corporate laws and court system, which are often preferred by investors. To do this, "Coastal Software Inc." might form a new entity, "Coastal Software LLC," in Delaware and then merge the old California corporation into this new Delaware entity.

  This is an F reorganization because: The underlying software business, its assets, and its ownership remain exactly the same. The change is solely in the company's legal domicile (place of organization) and potentially its specific corporate form (e.g., from a traditional corporation to an LLC, though often it's corporation to corporation in a new state). There is no change in the actual enterprise or its shareholders.

• Changing Corporate Designation: Consider "Community Gardens Corp.," a traditional for-profit corporation operating in Oregon. The shareholders decide they want the company to formally commit to social and environmental performance alongside profit, so they convert it into a "Benefit Company" (a specific legal designation for socially responsible businesses) under Oregon law. They create "Community Gardens Benefit Co." and merge the old corporation into it.

  This is an F reorganization because: It represents a "mere change in identity or form." The business of managing community gardens, the company's assets, and its ownership structure are all identical. The change is purely in its legal designation and corporate governance framework, reflecting a new mission, but not a change in the actual business operations or ownership.

• Domesticating a Foreign Corporation: Suppose "Global Trade Solutions Ltd." was incorporated in Bermuda many years ago, but now all of its operations, assets, and shareholders are located entirely within the United States. To simplify its legal and tax compliance, the company decides to "domesticate" itself by converting into a U.S. corporation, "Global Trade Solutions Inc.," in Nevada, without changing its business activities or ownership.

  This is an F reorganization because: It involves a change in the "place of organization" (from a foreign jurisdiction to a domestic one) and "form" (from a foreign entity type to a U.S. corporation) of the same company. The business of providing global trade solutions, the company's assets, and its shareholder base are all unchanged. The restructuring is primarily administrative and legal, bringing the company under a new jurisdiction while maintaining continuity of the enterprise.