# F reorganization

A restructure letting an [S corporation](https://searchspheresource.com/glossary/entity-type) stock sale be taxed like an asset deal.

Sellers' advisors propose it when the buyer wants asset-deal tax treatment but the company's contracts, licenses, or [EIN](https://searchspheresource.com/glossary/ein) would not survive an asset transfer. The seller reorganizes first, the buyer purchases the new entity's interests, and the tax result mirrors an [asset purchase](https://searchspheresource.com/glossary/asset-vs-stock-sale) with the operating history intact. It adds legal cost and weeks to the timeline, so the [LOI](https://searchspheresource.com/glossary/loi) should say who runs it and who pays for it, and the lender needs to see the structure early because the borrower entity changes.

In numbers: On a $2,000,000 S corporation deal, an F reorg can preserve the buyer's asset-basis step-up, worth six figures of future depreciation, while keeping the company's licenses and contracts in place.

Source: https://searchspheresource.com/glossary/f-reorganization
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