Question

Brown Corporation was organized in 2005 by Red Corporation (55%), Blue Corporation (35%), and Yellow Corporation (10%). Brown has been quite successful and now owns assets worth $12 million (basis of $4.4 million) with liabilities of $2 million. Red would like to obtain a controlling interest in Brown by using a "Type B" or "Type C" reorganization. Blue is willing to relinquish its interest in Brown, but Yellow is hesitant because it does not want to be a shareholder in Red.
a. Explain whether Red can accomplish its acquisition of Brown by using either a
"Type B" or a "Type C" reorganization.
b. Draw a diagram of the reorganization(s) that Red can use to accomplish its acquisition of Brown.


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  • CreatedSeptember 09, 2015
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