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99-5 assumes that state law recognizes single-member LLCs but that single-member LLCs are disregarded entities for tax purposes (and thus are sole proprietorships for tax purposes). In general, Rev. Rul. 99-5 treats sellers as selling, and buyers as buying, assets rather than an interest in a partnership.
One reorganization (an "E" reorganization) is a "recapitalization." A recapitalization is typically a transaction between a corporation and some or all of its shareholders or creditors. As a part of the transaction, outstanding securities (stock or debt) are exchanged for other securities.
A type A Reorganization is a tax-free merger or consolidation. Generally, in a merger, one corporation (the acquiring corporation) acquires the assets and assumes the liabilities of another corporation (the target corporation) in exchange for its stock.
II. Background on F Reorganizations Step 1: Create a new corporation (Newco) on day 1. ... Step 2: Contribute stock in the historic company (Oldco) to Newco on day 2. Step 3: Make QSub election on behalf of Oldco , using Form 8869, ?Qualified Subchapter S Subsidiary Election,? on day 2.
A ?99-5? refers to IRS Revenue Ruling 99-5, which discusses the federal income tax consequences of a transaction that takes place changing a single-member LLC (limited liability corporation) into a partnership for federal tax purposes.