What was broken
A family-owned manufacturing group had expanded into multiple businesses over two decades without a formal corporate structure. Different family members managed separate operations, but assets, liabilities, and ownership interests had become intertwined across several entities. Banks, auditors, and prospective investors found the structure increasingly difficult to evaluate.
What we did
CapEasy conducted a comprehensive review of the group’s legal entities, operational divisions, and ownership arrangements. We designed a simplified corporate structure, reorganized business activities under appropriate entities, updated governance documentation, and coordinated tax-efficient implementation while maintaining business continuity.
Where it landed
The manufacturing group transitioned to a significantly cleaner corporate structure, improving operational transparency, banking relationships, and long-term succession planning while reducing administrative complexity.
What counsel and your CPA ask for before they’ll touch the reorganization
A multi-entity family group deciding to consolidate or simplify its structure runs into the same opening question every time: who owns what, today, on paper. Counsel drafting the reorganization documents and a CPA modeling the tax consequences both start from the same three artefacts — a current ownership schedule for every entity in the group, an organization chart showing which entity holds which operating division or asset, and a reconciled intercompany balance sheet showing every loan, receivable and cost-sharing arrangement between related entities.
If the group’s corporations file a consolidated federal return, the parent also needs Form 851, the Affiliations Schedule, filed with that return — it identifies the common parent and every member of the affiliated group and is how the IRS confirms each subsidiary actually qualifies as a group member. A restructure that changes which entities are affiliated, or introduces a new parent, changes what goes on that schedule the following filing season.
The tax-free path runs through the Section 351 control test
Moving assets or business interests from one family entity into a newly organized holding structure is usually a taxable exchange — unless it qualifies under IRC §351. Transferring property to a corporation in exchange for stock is not taxed if the transferors control at least 80% of the corporation’s voting power and 80% of each class of nonvoting stock immediately after the exchange. Miss that threshold and the transfer is a sale for tax purposes, whatever the family intended it to mean.
The stock received takes the transferred property’s adjusted basis, carried forward and adjusted for any gain recognized, cash received, or liabilities assumed — which is exactly why the transfer needs a schedule behind it. Both the corporation and each transferor are required to attach statements describing the exchange to their tax returns; a restructure with no contemporaneous basis schedule leaves the CPA reconstructing it from memory at filing time instead of transcribing it.
Intercompany balances get checked from two directions
Once operating divisions sit in separate related entities, every loan, management fee, or cost allocation between them is watched two ways. First, timing: a related entity on the accrual method cannot deduct an expense or interest owed to a related party on the cash method until that party has actually been paid and included the amount in income — a rule built specifically to stop related entities from shifting the timing of a deduction. Second, pricing: the IRS holds statutory authority to reallocate income and deductions between related entities whenever necessary to clearly reflect each entity’s income or prevent tax evasion, which is the backbone behind every related-party transfer-pricing challenge.
The practical defense against both is the same schedule this engagement builds: every intercompany balance settled on paper, dated, and priced consistently with what unrelated parties would have charged — including interest on intercompany loans set against the IRS’s published monthly Applicable Federal Rates rather than an arbitrary family-decided figure. A restructure that walks in with that schedule already reconciled is the one counsel can execute from; one that walks in with balances nobody can explain is the one that stalls in diligence.
The new entities don’t add a federal disclosure filing
A group reorganizing into a cleaner set of entities is not taking on a new federal beneficial-ownership reporting burden by doing it. FinCEN’s final rule made permanent the exemption first issued in March 2025: the current definition of “reporting company” under the Corporate Transparency Act covers only entities formed under foreign law that register to do business in the US. A new domestic holding company or operating subsidiary created as part of a restructure is outside that definition from formation — there is no BOI report to file for it, no matter how many new entities the reorganization creates.
What to take from it
- Ownership and intercompany relationships have to trace to a reconciled, dated schedule before counsel can execute a restructure — not be reconstructed after the reorganization is signed.
- A tax-free transfer into a controlled entity generally requires the transferors to hold a high supermajority of the entity’s voting and nonvoting stock immediately after — and only with statements documenting the exchange attached to the returns.
- Intercompany balances are scrutinized on timing (accrual/cash matching between related parties) and on pricing (the tax authority’s statutory power to reallocate income between related entities) — the same schedule that documents the balance is the defense on both.
- A group filing a consolidated return starts with an affiliations schedule — a restructure that changes group membership changes what that schedule reports the next filing season.
- New entities formed in a restructure do not automatically add a new beneficial-ownership disclosure filing; check the current exemption rules before assuming otherwise.