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Abstract: 

The sale of a subchapter S bank holding company and its bank subsidiary can be structured a number of ways. The holding company stock can be sold with the bank, or the bank stock can be sold separately by the holding company. The holding company and bank can also negotiate for the sale of specific assets, without the need to sell any stock. This article explores these various forms and the unique challenges and opportunities associated with each, with particular emphasis on the tax consequences to the selling corporation, the selling shareholders, and the acquiring corporation.

Keywords: banks; S corporation; core deposit; tax-free reorganizations; built-in gains; IRC Sec. 338(h)(10) election; cash-basis adjustment; asset purchase; assumption of liabilities

Affiliations:  1: Crowe Horwath LLP; 2: Private Practice.