Question

Determine whether the following transactions are taxable. If a transaction is not taxable, indicate what type of reorganization is effected, if any.
a. Alpha Corporation owns assets valued at $400,000 and liabilities of $100,000.
Beta Corporation transfers $160,000 of its voting stock and $40,000 in cash for 75% of Alpha's assets and all of its liabilities. Alpha distributes its remaining assets and the Beta stock to its shareholders. Alpha then liquidates.
b. Alpha Corporation owns assets valued at $300,000 with liabilities of $100,000, and Beta Corporation holds assets valued at $1 million with liabilities of $200,000.
Alpha exchanges 80% of its voting stock for 100% of Beta's assets and liabilities.
Beta distributes the Alpha stock to its shareholders. Beta then liquidates.
c. Alpha Corporation obtained 200,000 shares of Beta Corporation's stock 10 years ago. In the current year, Alpha exchanges 40% of its stock for 500,000 of the remaining 600,000 shares of Beta stock. After the transaction, Alpha owns 700,000 of the 800,000 Beta shares outstanding.
d. Alpha Corporation has two divisions that have been in existence for seven years. The nail division has assets valued at $455,000 and liabilities of $75,000, whereas the hammer division has assets valued at $670,000 and liabilities of $50,000. Alhpa would like the two divisions to be separate corporations. It creates Beta Corporation and transfers all of the hammer division assets and liabilities in exchange for 100% of Beta's stock. Alpha then distributes the Beta stock to its shareholders.
e. Alpha Corporation owns assets valued at $750,000 with liabilities of $230,000, and Beta holds assets valued at $1.5 million with liabilities of $500,000. Beta transfers 33% of its stock for $700,000 of Alpha's assets and $200,000 of its liabilities. Alpha distributes the Beta stock and its remaining assets and liabilities to its shareholders in exchange for their stock in Alpha. Alpha then terminates.
f. Beta Corporation has not been able to pay its creditors in the last year. To avoid foreclosure, Beta transfers its assets valued at $650,000 and liabilities of $700,000 to a new corporation, Alpha, Inc., in accordance with a state court proceeding.
The creditors receive shares of Alpha voting stock valued at $300,000 and cancel the outstanding debt. The former Beta shareholders receive the remaining shares in Alpha.


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  • CreatedSeptember 09, 2015
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