Corporate Reporting of Transactions Affecting Basis

Under Section 6045B of the Internal Revenue Code of 1986, as amended (the “Code”) many corporations are required to file a new return (Form 8937) with the IRS in connection with non-dividend distributions and other corporate actions affecting stock basis. More specifically, starting in 2011, the issuer of “specified securities” shall file a return with the Department of the Treasury within 45 days of any “organizational action which affects the basis of such specified security of the issuer.” “Specified securities” include both (1) shares of stock in an entity organized as, or treated for federal tax purposes as, a corporation, and (2) other interests treated as stock. The reporting requirement applies to both United States and foreign corporations, and a reporting corporation may instead of sending the Form 8937 to the IRS and each shareholder, choose to satisfy its obligation by publicly posting such completed Form 8937 on its website for 10 years.

For more information, contact your tax professional or go to the IRS website at: http://www.irs.gov/instructions/i8937/ar01.html

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Roger Royse
rroyse@rroyselaw.com

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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