SPAC and De-SPAC Transactions: U.S. Tax Considerations

Summary

This practice note provides a high-level overview of U.S. federal income tax considerations that apply to special purpose acquisition companies (SPACs) and de-SPAC transactions. In particular, this practice note describes certain tax considerations that apply to the initial choice of entity for the SPAC, domestic and international de-SPAC transactions, acquisitions of corporate and partnership target companies, and the exercise of redemption rights in connection with a de-SPAC or liquidation transaction. This practice note does not generally discuss state, local, or foreign income tax consequences, nor does it address tax issues relating to the issuance of SPAC shares and warrants to sponsors. Except as otherwise provided below, this practice note only discusses considerations relevant to U.S. citizens, resident aliens, and domestic corporations that own SPAC or target shares and does not address rules that apply to non-U.S. persons, partnerships, or other pass-through entities.