Re: Moving an S-Corp from one state to another.



Thank you Shyster.
You are very knowledgeable. My S-Corp is the simplest ever. No shareholders.
I am 100% owner and the only employee/president/etc. I plan to move to
Nevada and live there for a while. I like the location close to many
National Parks, and cool cities in California. There is also a lot of good
quality food in Las Vegas buffets. Nevada S-Corp also allows me to live
elsewhere in the US and operate my business. This is not the case with
S-Corps formed in most states. Supposedly the laws are also more protective
in Nevada then elsewhere.

I will do some research about this "F" Reorganization. Please let me know if
you now about any good info on the internet on this subject. Thank you very
much for sharing the information with me.

Alan Duchovny

"Shyster1040" <Shyster1040@xxxxxxxxxxxxxxxxx> wrote in message
news:ccf69513864cf80206e8f5ebc48fbc46@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Setting aside the issue of why you want to move (an issue adequately
raised
by Katie), if you want to change the state of incorporation of an S-corp
without losing the name, EIN, and assets, you would need to do a so-called
"F" Reorganization of the corporation.

This is rather easily achieved in the case of a single corporation that is
just being redomesticated in a different state.

Some states have a domestication provision in their corporation law that
permits a foreign corporation to become a domestic corporation of that
state by filing a single certificate.

If a conversion statute is not available, what you would do is (a) form a
new corporation in the state you want to move into and (b) immediately
merge that new corporation with and into your existing S-corporation, with
the existing S-corporation being the surviving corporation, and with the
resulting corporation becoming a domestic corporation of the state you
want to move into.

For US federal tax purposes, this is considered as nothing more than an
irrelevant change in a purely formal characteristic of the corporation,
and is almost completely disregarded. Instead, the resulting corporation
is treated as a mere continuation of the old corporation, and inherits the
old corporation's tax year (which doesn't close), tax attributes, and
EIN.

The name can be retained only if the particular name has not already been
reserved or used by an existing corporation in the state you want to move
into.

The assets will transfer to the new corporation by operation of law, with
the result that you will not have to file any transfer papers or pay any
state transfer taxes (generally); however, it would probably be a good
idea to update the recorded name of the legal owner so that no confusion
results later on.

For federal purposes, there are no additional forms to file - the existing
s corporation never dissolved, and the new corporation you formed had only
a transitory existence and conducted no activities other than being merged
out of existence, and is therefore disregarded for federal tax purposes.

You may, however, have to file some additional forms in the old state
you're leaving.

Now, please keep in mind that there is some flexibility in an "F"
Reorganization in terms of changing the terms of the certificate of
incorporation, but don't get cute, don't mess around with the capital
structure, and don't bring in new investors who are waiting in the wings
immediately prior to the F reorg - why take chances? If you do get fancy,
then you may lose nonrecognition treatment as an "F" reorg, which would
leave you in the position of exchanging stock with a low basis for stock
with a high value (typically) and will require you to recognize gain.



.