Did a federal Section 368(a)(1)(F) reincorporation eliminate Texas final and initial reports when state records showed one entity terminated and another was authorized?

Plain-English summary

Federal F-reorganization continuity did not collapse the separate Texas filing duties shown by state termination and authorization records.

The taxpayer said the corporation changed its state of incorporation and name in an I.R.C. Sec. 368(a)(1)(F) reorganization, carrying all federal tax attributes and creating no federal or state short year.

Texas records showed a different procedural result:

• the old corporation terminated on April 29, 1998 and had to file a 1998 annual report, public information report, and final franchise-tax report under Section 171.0011; and
• the new corporation received a Texas certificate of authority on April 23, 1998 and had an initial report due July 21, 1999.

The letter did not reject federal F-reorganization treatment; it applied Texas entity records and filing rules separately.

Currency note: These report procedures belong to the former franchise tax. Confirm current Texas conversion and margin-tax filings.

What this means for you

Corporations reincorporating across states

Federal continuity did not eliminate Texas closing and opening reports when state records reflected two entity events.

Tax professionals

Reconcile federal reorganization treatment with Secretary of State termination and authority dates before assuming report continuity.

Common questions

Q: Did the old corporation file a final report?
A: Yes.

Q: Did the new corporation file an initial report?
A: Yes.

Q: Did the letter invalidate the federal reorganization?
A: No. It addressed Texas filings.

Citations and references

• Texas Tax Code Sec. 171.0011
• I.R.C. Sec. 368(a)(1)(F)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=FIT
• Opinion: https://star.comptroller.texas.gov/view/9806589L

Original ruling text

June 11, 1998

RE: **
Texas Taxpayer Number: **

Texas Taxpayer Number: **

Dear Mr. **:

I received a copy of your May 26, 1998 letter addressed to the Texas Secretary
of State's office.

You stated in your letter that "** changed its state of
incorporation from ** to ** as well as its name to
** under Internal Revenue Code Section 368(a)(1)(F) under which all
tax attributes including (but not limited to) net operating losses, carryover
to **. Accordingly for income tax purposes, there is a full
continuation of **, such that there is no cessation of
** taxable year. Thus, no federal or state final or short year
returns will be prepared for ** for the 1998 calendar year."

According to our records, **, terminated its existence on April 29,
1998. As a result of the termination, ** must file a 1998 annual
Texas franchise tax report and Public Information Report. ** must
also file, according to Section 171.0011 of the Texas Tax Code (TTC), a final
franchise tax report.

**, received a Certificate of Authority to transact business in
Texas on April 23, 1998. It's initial franchise tax report will be due on July
21, 1999.

If you have any questions about this or any other franchise tax matter, please
call me at
1-800-531-5441, extension 34612. My direct number is (512) 463-4612. You may
write me at Tax Policy Division, Comptroller of Public Accounts, Austin, Texas
78774.

Sincerely,

Janet Spies
Tax Policy Division