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Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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is a creation of a corporation under a texas "plan of conversion"

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is a creation of a corporation under a texas "plan of conversion" a code
section 351 transfer? i.e. a mexican corporation transfers all of its assets, liabities, and stock to a u.s. corporation in texas under this accepted texas "plan of convversion". The end result is an exact balance sheet converted from pesos to dollars. must an election to treat this transation as a 351 transfer be made?


Hi and welcome to Just Answer!
Indeed - the "plan of conversion" provision does exists under Texas business code - see here -
(a) A plan of conversion must include:
(1) the name of the converting entity;
(2) the name of the converted entity;
(3) a statement that the converting entity is continuing its existence in the organizational form of the converted entity;
(4) a statement of the type of entity that the converted entity is to be and the converted entity's jurisdiction of formation;
(5) the manner and basis of converting the ownership or membership interests of the converting entity into ownership or membership interests of the converted entity;
(6) any certificate of formation required to be filed under this code if the converted entity is a filing entity; and
(7) the certificate of formation or similar organizational document of the converted entity if the converted entity is not a filing entity.
(b) An item required by Subsection (a)(6) or (7) may be included in the plan of conversion by an attachment or exhibit to the plan.
The corporate creation under a Texas "plan of conversion" might qualify as section 351 transfer if certain requirements are met.
Please see here -

a)General rule
No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in section 368(c)) of the corporation.

So far based on your example - if the Mexican corporation transfers its assets in exchange of shares of the US corporation - that woudl be section 351 transfer. However if the Mexican corporation is merged with the US corporation - that might qualify as reorganization under section 368 - see here -

(D) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the transfer the transferor, or one or more of its shareholders (including persons who were shareholders immediately before the transfer), or any combination thereof, is in control of the corporation to which the assets are transferred; but only if, in pursuance of the plan, stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section 354, 355, or 356;

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