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Legal Ownership Restructuring for DCCS: Tax Interest Reserve Contingency Transfer

This case study explores a legal restructuring whereby DCCS shifted ownership to become a sister company of DFS USA and addresses the transfer of tax interest contingency reserve. The resolution involves moving DCCS back under DFS USA as a subsidiary, with a positive evaluation across legal, funding, tax, accounting, and M&A aspects.

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Legal Ownership Restructuring for DCCS: Tax Interest Reserve Contingency Transfer

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  1. DC Capital Services Structure • Issue:During the course of the legal restructuring DCCS legal ownership was changed and DCCS became a legal sister company along side of DFS USA. Due to stand alone legal requirements the existing tax interest contingency reserve associated with LILO/SILO transactions would need to be moved from DFS USA to DCCS. • Resolution:Move DCCS entity back under DFS USA as a subsidiary. • Evaluation of proposed resolution: • Legal – simple resolution, overall strategy is maintained • Funding – less funding issues, equity transfer not required • Tax – no change in taxation • Accounting – no additional requirements • M&A – no restriction for any potential M&A activities

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