C12-Chp-07-7-LTR9442020-Type B Reorganization

C12-Chp-07-7-LTR9442020-Type B Reorganization -...

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bb64215b5891bce4c34a70eabf9835dcabe447d8.doc. Page 1 of 2 LTR-RUL, UIL No. 368.02-00 Definitions relating to corporate reorganizations, Stock for stock, Letter Ruling 9442020, (July 20, 1994) [Code Sec. 368 ] This letter responds to your March 29, 1994, request for rulings regarding certain federal income tax consequences of a proposed transaction. The information contained in your request and in later correspondence is summarized below. Acquiring is a publicly traded corporation, and Target is an S corporation owned 60 percent by A and 40 percent by B. For what are represented to be valid business purposes, Acquiring will acquire all of the Target stock in exchange solely for either Acquiring voting common stock or Acquiring voting preferred stock. Voting common will be used if the Securities and Exchange Commission has declared effective (that is, approved) Acquiring's registration statement by the acquisition date. Otherwise, voting preferred will be exchanged and will be converted to voting common on the earlier of registration approval or the shareholder's decision to convert. Target expects to distribute the full amount of its accumulated adjustment account (as defined in §1368(e)(1) of the Internal Revenue Code) to its shareholders as part of the transaction. The parties have made the following representations concerning the proposed acquisition: (a) The fair market value of the Acquiring stock received by each Target shareholder will approximately equal the fair market value of the Target stock surrendered in the exchange. (b) There is no plan or intention by the shareholders of Target who own 1 percent or more of the Target stock, and to the best of the knowledge of the management of Target, there is no plan or intention on the part of the remaining shareholders of Target to sell, exchange, or otherwise dispose of a number of shares of Acquiring stock received in the transaction that
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C12-Chp-07-7-LTR9442020-Type B Reorganization -...

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