Anaconda Ltd. has substantial earnings and profits and appreciated assets. It adopts a plan of complete liquidation and distributes its assets to its shareholders. Soon thereafter, the shareholders transfer the assets to a new corporation, King Cobra Inc., in return for King Cobra stock, but retain cash and marketable securities.

What are the shareholders trying to accomplish?

How will the IRS most likely treat the transactions?

(See, e.g., Reg. §§1.301-1(1) and 1.331-1(o);

Rev. Rul. 61-156, 1961-2 CB 62.)