After Page 419 1. Assuming the judicial requirements are met, determine whether the following transactions qualify...

 

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After Page 419 1. Assuming the judicial requirements are met, determine whether the following transactions qualify as a Type C reorganization: a) Target Corporation ("T") has $70,000 of operating assets and $30,000 of cash and securities held as an investment. Acquiring Corporation ("P") issues its voting stock worth $70,000 in exchange for the operating assets and T liquidates, distributing the P stock and its cash and investment securities to its shareholders. b) Same as (a), above, except that P acquires $40,000 of operating assets and $30,000 of cash and investment securities in exchange for the P voting stock. T then liquidates, distribution $70,000 of P stock and $30,000 of operating assets to its shareholders. c) Same as (a), above, except that T has $100,000 of operating assets and $30,000 of liabilities. P issues $70,000 of its voting stock in exchange for T's assets and liabilities, and T liquidates, distributing the P stock to its shareholders. d) Same as (c), above, except that P issues $60,000 of its voting stock and $10,000 cash in exchange for all of T's assets and liabilities, and T liquidates, distributing the P stock and cash to its shareholders. After Page 419 1. Assuming the judicial requirements are met, determine whether the following transactions qualify as a Type C reorganization: a) Target Corporation ("T") has $70,000 of operating assets and $30,000 of cash and securities held as an investment. Acquiring Corporation ("P") issues its voting stock worth $70,000 in exchange for the operating assets and T liquidates, distributing the P stock and its cash and investment securities to its shareholders. b) Same as (a), above, except that P acquires $40,000 of operating assets and $30,000 of cash and investment securities in exchange for the P voting stock. T then liquidates, distribution $70,000 of P stock and $30,000 of operating assets to its shareholders. c) Same as (a), above, except that T has $100,000 of operating assets and $30,000 of liabilities. P issues $70,000 of its voting stock in exchange for T's assets and liabilities, and T liquidates, distributing the P stock to its shareholders. d) Same as (c), above, except that P issues $60,000 of its voting stock and $10,000 cash in exchange for all of T's assets and liabilities, and T liquidates, distributing the P stock and cash to its shareholders.

Answer rating: 100% (QA)

To determine whether the transactions qualify as a Type C reorganization we need to consider the requirements set by the IRS Type C reorganizations in... View the full answer