CONTINUITY OF INTEREST

continuity of interest. 1. A doctrine covering acquisitive reorganizations whereby a target corporation’s share-holders must retain a share in the acquiring corporation to qualify the exchange as a tax-deferred transaction. 2. A judicial requirement for divisive reorganizations whereby a target corporation’s shareholders must retain an interest in both the distributing and the controlled corporations to qualify the exchange as a tax-deferred transaction. [Cases: Internal Revenue  3677.] [Blacks Law 8th]