Northwestern Pritzker School of Law Scholarly Commons
Abstract
Tax laws applicable to triangular mergers lack neutrality, are
complex, and overlap substantially with other tax-preferred forms of
corporate acquisition. Their current status is a result of both path
dependency and Congress's attempt to create consistency within a
framework founded upon inconsistent conceptualizations of the
corporation. This Article highlights problems arising under current rules,
including a notable lack of tax neutrality among merger forms. It proposes
pragmatic revisions made within the constraint of double taxation of
corporate profits and then revisits the question through a more normative
framework. The Article concludes that the tax treatment of target
shareholders and the target corporation in corporate acquisitions should be
disaggregated. Finally, it observes that both pragmatic and normative
solutions proposed within the reorganization statute are unsatisfying in
light of larger structural problems in the Internal Revenue Code