We are proud to be named a West Coast Regional Leader for 2024

Chapter 11 Bankruptcy and IRS Form 8937

ARTICLE | September 16, 2021

Authored by RSM US LLP

In a typical single-debtor Chapter 11 bankruptcy reorganization, secured creditors acquire majority ownership of the reorganized corporation pursuant to the bankruptcy plan of reorganization.1 In most cases, prior equity holders receive no equity in the reorganized corporation; however, in some bankruptcy reorganizations prior equity holders receive new equity in the reorganized corporation.2 In either case, the reorganization may trigger a Form 8937 filing requirement for the reorganized corporation.

Requirement to file a Form 8937 pursuant to a Chapter 11 recapitalization

Many corporate actions can trigger the requirement for the corporation to file a Form 8937, Report of Organizational Actions Affecting Basis of Securities. Such actions include corporate distributions in excess of earnings and profits, certain merger and acquisition transactions, and exchanges of stock-for-stock or stock-for-debt, as described further below.

The Form 8937 requirement arises under section 6045B and Reg. section 1.6045B-1, and stems from Congress’ expansion of tax basis reporting requirements in 2008 legislation.3 Section 6045B requires corporate issuers of certain securities to report information to the IRS and its shareholders following certain actions that affect the security’s basis. Congress enacted the provision to improve tax compliance resulting from the proper determination of the basis of securities.

For example, a corporation that exchanges all of its outstanding notes for corporate stock in a Chapter 11 reorganization treated as a recapitalization generally must file a Form 8937. The form would serve to inform the prior note holders regarding their basis in the shares of stock received in exchange for their notes, and would make the same basis information available to brokers (if any) that hold such stock for customers. If prior equity holders also receive new equity in the reorganized corporation, the Form 8937 will also apprise the prior equity holders of the basis in the shares of the stock received in exchange for their prior equity interests, and would again make the same basis information available to brokers.

The filing requirement only applies upon certain “organizational actions” taken by an issuer of a “specified security".4 We will next discuss the organizational action and specified security concepts in turn.

Organizational action

Only organizational actions that affect the basis of all holders of a security or class of a security trigger the section 6045B reporting requirements.5 Organizational actions generally subject to the reporting requirement include:

  • Distribution of cash or stock in excess of current and accumulated earnings and profits.
  • Certain mergers and acquisitions.
  • Exchange of notes for stock, or stock for a different class of stock.
  • The issuance of a debt instrument in a recapitalization, including a recapitalization resulting from a significant modification or a bankruptcy reorganization.
  • Nontaxable stock split or reverse stock split.

Certain actions generally do not trigger the reporting requirement, including:

  • Distribution of money or stock not in excess of current and accumulated earnings and profits.
  • The issuance of a debt instrument.
  • The distribution of stock to someone exercising a previously granted right to purchase stock.

Specified security

Specified securities include any stock and certain debt instruments issued by an entity classified as a corporation, whether foreign or domestic.6 Debt or equity interests issued by entities classified as partnerships for federal income tax purposes are not specified securities.7 Also, a security classified as stock by the issuer is treated as stock for purposes of section 6045B.

Specified securities generally include: (1) stock, (2) debt instruments, (3) options on specified securities or on financial attributes of specified securities, warrants and certain stock rights, and (4) securities futures contracts.8

Additional rules for Form 8937 filings and content

Form 8937 must be filed by the earlier of: (1) 45 days after the date of the event affecting the specified security’s basis,9 and (2) January 15 of the year following the calendar year of the event affecting the security’s basis.10

If the corporation makes Form 8937 publicly available in the manner prescribed by the regulations, along with the name, address, phone number and email address of the person required to file the return, then the corporation need not file the information return or furnish statements to the holders.11 The regulations state that this can be accomplished if the issuer posts Form 8937 in a readily accessible format in an area of its primary public website dedicated to this purpose and keeps the return accessible to the public for 10 years on its primary public website or that of any successor organization.12

S corporations frequently make distributions that are treated as reductions to stock basis rather than as taxable dividends. An S corporation is deemed to satisfy the reporting requirements if the required information is included in the Schedules K-1 that are included with its tax returns when filed on a timely basis.13 Accordingly, the S corporation does not need to report separately under section 6045B.

A corporate issuer that, prior to the reporting due date, cannot determine the quantitate effect of an organizational action on basis may make reasonable assumptions regarding the relevant facts. However, for this purpose, the corporation must treat a payment that may be a dividend consistently with the corporation’s treatment of the payment for purposes of determining whether it is a dividend.14 Under the rules relating to dividend treatment, for purposes of furnishing Forms 1099-DIV to report the taxable (dividend) portion of the distribution, a corporation is required to treat the entire distribution as a taxable dividend unless it can establish the amount that is not a dividend. Accordingly, if the entire amount of a distribution is reporting as a taxable dividend, section 6045B reporting would not be required (because the distribution would not impact basis). If the corporation later determines that a portion of the distribution is not a dividend, it should amend its Forms 1099-DIV and provide the section 6045B information within 45 days of determining the correct facts.15

In some cases, a corporation may believe that a portion of a distribution is a taxable dividend but might not know the amount with certainty. In these cases, it is appropriate to make a timely filing under section 6045B and amend it later when the correct information becomes available. As noted above, the corporation may make reasonable assumptions about facts that cannot be determined before the due date.16 The corporation must file a corrected return within 45 days of determining facts that result in a different quantitative effect on basis from what the corporation previously reported.17


Taxpayers emerging from bankruptcy reorganizations should consider whether the Form 8937 filing requirement applies to them, bearing in mind the Form 8937 filing deadline is the earlier of: (1) 45 days after the date of the reorganization, and (2) January 15 of the year following the calendar year of the reorganization.

1 A bankruptcy reorganization of this sort, involving exchange of debt for equity of a corporate debtor, may qualify as a recapitalization under Internal Revenue Code (IRC) section 368(a)(1)€ (an “E Reorganization”), and may also qualify as a reorganization under IRC section 368(a)(1)(G) (a “G Reorganization”). Parties to E Reorganizations and G Reorganizations generally qualify for tax-free treatment with respect to exchanges of stock or securities in the reorganization. By contrast, no exchange of debt for equity of a corporate debtor typically occurs in a Bankruptcy Code section 363 asset sale. Nonetheless, a section 363 asset sale may alsoqualify as a G Reorganization. All references herein to “section” or “Reg. section” refer to the IRC and the regulations promulgated thereunder, unless a specific reference is made to the Bankruptcy Code.

2 For example, in the American Airlines bankruptcy, former equity holders received new equity in the reorganized company. In re AMR Corporation, et. al., Case No. 11-15463 (SHL), (Jointly Administered), (Banker S.D.N.Y.).

3 Section 403 of the Energy Improvement and Extension Act of 2008, Div. B of Pub. L. no. 11-343, 122 Stat. 3765 (Oct. 3, 2008) (the “2008 Act”), amended the broker reporting rules in section 6045. As amended by the 2008 Act, section 6045(g) generally requires a broker, when reporting the sale of a covered security to the Internal Revenue Service, to report the customer’s adjusted basis for the security. The 2008 Act also added two new sections to the IRC: (1) section 6045A, which requires a broker transferring certain securities to report basis and other information to the receiving broker; and (2) section 6045B, which requires an issuer of certain securities to file a Form 8937 to describe the issuer’s actions that affect the basis of the security.

4 Section 6045B(a)(1); Reg. section 1.6045B-1(a)(1).

5 See Section 6045B(a)(1); Reg. section 1.6045B-1(a)(1).

6 Reg. section 1.16045-1(a)(14). See generally Sections 6045B(d) and 6045(g)(3)(B).

7 See Reg. section 1.16045-1(a)(14). See also Sections 6045B(d) and 6045(g)(3)(B).

8 See Reg. sections 1.16045-1(a)(14), -1(m) and -1(n).

9 In the case of a bankruptcy reorganization, the event affecting the specified security’s basis is typically the effective date of the plan of reorganization, not the confirmation date of the plan.

10 Section 6045B(b)(2).

11 This is generally the case for large bankruptcies. See, for example, a Form 8937 made publicly available relating to the American Airlines bankruptcy at

12 Section 6045B(e); Reg. section 1.6045B-1(a)(3).

13 Reg. section 1.6045B-1(c).

14 Reg. section 1.6045B-1(a)(2)(ii). See also section 6042(b)(3); Reg. section 1.6042-3(c).

15 Reg. sections 1.6045B-1(a)(2)(ii) and 1.6045B-1(g), Example 2(iii).

16 Reg. section 1.6045B-1(a)(2)(ii).

17 Id.

Let's Talk!

Call us at +1 213.873.1700, email us at or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Michael Barton, Joseph Wiener and originally appeared on Sep 16, 2021.
2022 RSM US LLP. All rights reserved.

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

​Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how ​Vasquez & Company LLP can assist you, please call +1 213.873.1700.

Subscribe to receive important updates from our Insights and Resources.

  • Should be Empty: