What is considered substantially all?

For IRS ruling purposes, “substantially all” means 90% of the net assets and 70% of the gross assets, while courts have applied a facts-and-circumstances test focused on operating assets.

What percentage is substantially all?

All or substantially all in this context means 95 percent or more of the principal balance of the underlying assets in the ABS. All or substantially all in this context means 85 percent or more of the dollar amount of the credit exposures underlying the ABS. All or substantially all means 90% or more.

Which acquisitive reorganization requires substantially all of the assets are acquired?

Type D acquisitive reorganization
Type D acquisitive reorganization: The transfer of “substantially all” of the target corporation’s assets to an acquiring corporation, provided that the target corporation or its stockholders (or a combination of the two) has “control” (generally 80% ownership) of the acquiring corporation immediately after the …

What does it mean to have substantially all assets?

That term generally refers to the quantity of assets that must be transferred (or held) to qualify a transaction as a reorganization. For IRS ruling purposes, “substantially all” means 90% of the net assets and 70% of the gross assets, while courts have applied a facts-and-circumstances test focused on operating assets.

How to satisfy the’substantially all’rule as?

In determining how to satisfy this second test, as in the acquisition area, the principal help is an advance ruling guideline. Under Rev. Proc. 77-37, section 3.04 , the test is satisfied, for advance ruling purposes, if at least 90% of the corporation’s gross assets consist of the stock and securities of a subsidiary engaged in active business.

What should be considered in an asset sale?

While the percentage of a corporation’s assets being sold is relevant in considering whether a sale constitutes “all or substantially all” of a corporation’s property, it is not necessarily the determining factor.

How is the 90% of gross assets test satisfied?

There is also no stated restriction on pre-spin-off distributions of other assets. The 90% of gross assets test under Section 355 apparently is satisfied based simply on a static comparison of the value of the qualifying stock and securities versus the value of any other assets after the corporate division.