When structuring a flip transaction – a deal in which
shareholders in an overseas company exchange their shares for
shares in a new US company – there are multiple initial
issues to consider as outlined below. In a flip transaction, the
new US company becomes the parent company, and the overseas company
becomes a wholly owned subsidiary of the parent.
1. Tax planning and tax clearances (if required) for current
shareholders
To identify taxes triggered by the flip for current shareholders
in an overseas company and determine future tax consequences (e.g.,
controlled foreign corporation rules):
- Consider tax consequences for individual and
corporate/institutional shareholders.
