1.    Corporate reorganizations and business purpose
2.    Codification of economic substance
3.    Basic internal restructuring transactions
4.    Use of SMLLC Conversions
5.    Select internal separation strategies
6.    Common issues in implementing supply chain management and other structures
7.     “Check the box” effective date issues
8.    Modest periods of retroactivity.
9.    The test for “legitimate state interest” means anything that will support the states’ supply of money will provide basis for their findings. 

As the Ernst & Young presenters are working directly with corporations on constant analysis and restructuring projects, they were able to lend a bit of practical experience and findings to the deeper content discussed.  Some of the key areas they see as overall rationale for undertaking these projects (as they can be cumbersome), are:
•    Simplification of organizational structure
•    Realignment of legal structure to be consistent with operational structure
o    Pre-disposition planning
o    Post-acquisition planning
•    Implementation of supply chain management structures either domestically or globally
•    Foreign legal or tax reasons
•    State and local tax reasons (mixing income and loss in state separate return jurisdictions)
•    Reduction of accounting or tax compliance burdens – which was a very common one and one in which the presenters dealt with quite a bit where they saw taking away one box on the org chart saving over $40K per year in just simple burdens alone

My learned colleagues did an excellent job of outlining the various basic internal structural transactions and outlining the issues/considerations.  I have worked with clients in the past to provide data to support the analysis that goes into these types of structural planning opportunities, and am constantly amazed at all the elements that are factored into the analysis.  Just one word to the wise, make sure that a multi-faceted team (including all tax types) are represented early on in the analysis, in order to provide the most value to this analysis and make sure that your “simplified” structure does in fact provide the realized benefits originally intended.

Stay tuned for the second part of the series, which will be posted next week.

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