Nonqualified organization restructuring is an organization reorganization action such as merger, division, spot investment, stock exchange, relocation, and spot distribution that do not meet the eligibility requirement stipulated by the tax law. On tax basis, assets etc. are recorded as transferred at fair market value, so gains and losses on transfer will occur as a rule. In non-qualified mergers and non-qualified split-type splits, deemed dividends may occur. For nonqualified organization restructuring, those that meet tax qualification requirements are called qualified organization restructuring. Although there is unrealized profit in the benefit of qualified organization restructuring, if there is unreported loss in assets to be handed over, this is not the limit. Therefore, despite being a qualified organization restructuring as it is, there are companies that decide to reorganize nonqualified organizations by devising themselves. Each company has a corporate form, and there is a history of realignment. When reorganizing a company, it is classified as qualified organization restructuring or nonqualified organization restructuring. This depends on the classification of tax qualification or tax incompetence. That will also be stated in M & A, and it will become necessary when the company is sold.
Whether non-qualified organization restructuring is necessary at the time of company sale
In the case of reorganizing a company, we will check whether it fulfills the conditions for rearranging by viewpoint item. Then, if the conditions are satisfied for each item, it becomes qualified organization restructuring. If it fails to satisfy all the restructuring conditions, it will become a nonqualified organization restructuring. Even if it becomes non-qualified organization restructuring, there is no harm, but tax loss may occur. Therefore, it is desirable to satisfy the conditions in all viewpoints as much as possible. When reorganizing a company, various checks are entered and it is divided whether qualified organization restructuring or nonqualified organization restructuring, detailed conditions are not mentioned in M & A, but it is also necessary at the time of company sale. There are seven points of checking. In the case of property transfer, no separate financial transactions occur, asset takeover is to take over at least 50%. Also, when reorganizing, it is necessary for employees to inherit 80% or more. Upon restructuring, the business after the reorganization must be related to the project before the reorganization. We can not qualify as long as the project is not likely to continue. If even one of these checking perspectives does not satisfy the condition, it will be regarded as a nonqualified organization restructuring.