Question: P acquires T in a transaction structured as an A reorganization with no boot. Two weeks after the merger, 70% of the former T shareholders

P acquires T in a transaction structured as an A reorganization with no boot. Two weeks after the merger, 70% of the former T shareholders sell their P stock to X (an unrelated party) under a pre-arranged, binding agreement between the T shareholders and X entered into just prior to the merger. X is not related to P. Ps acquisition of T:

A. Will not qualify as a tax-free A reorganization because the transaction fails the continuity of proprietary interest requirement

B. Will not qualify as a tax-free A reorganization because the transaction fails the continuity of business enterprise requirement

C. Will qualify as a tax-free A reorganization

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