• Circular Flow and F Reorganization
  • January 4, 2011 | Author: Jasper L. Cummings
  • Law Firm: Alston & Bird LLP - Raleigh Office
  • LTR 201050020 is one of a fairly large number of letter rulings issued recently on novel reincorporation patterns. It involves a foreign-to-foreign Type F reorganization of a CFC. The taxpayer engineered the reorganization by using a transitory loan from an outside lender and a circular flow of the borrowed cash around its corporations. You might think that the transitory loan and circular flow of cash would cause the IRS to view the transaction uncharitably; instead, the IRS charitably allowed an odd assortment of events to be cobbled together into what it called a section 368(a)(1)(F) reorganization.