Assets of its assets to corp y in exchange for corp y

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Intermediate Algebra
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Chapter 1 / Exercise 59
Intermediate Algebra
Tussy/Gustafson
Expert Verified
assets) of its assets to Corp Y, in exchange for Corp Y stock, which Corp X then distributes in liquidation to its shareholders, AND transferor or its shareholders (ie Corp P) are in control of transferee (Corp Y)2.Same as a “C”, except for that transferor must control transferee right after3.A couple of special rules:a)No boot requirements – the “control” requirement (ie 50% ownership) handles the continuity of proprietary interest issueb)The distributing corporation (Corp X here) MUST liquidateBusiness XBusiness YBeforeAfterCorp YBusiness XBusiness YCorp Y stockAssetsCorp Y stockCorp PCorp P31
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Intermediate Algebra
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Chapter 1 / Exercise 59
Intermediate Algebra
Tussy/Gustafson
Expert Verified
Forward Subsidiary MergersCorp XMerger SubForward Subsidiary Merger – what happens1.Corp X merges into Merger Sub2.Why is this done? It’s easy:
Business XBeforeAfterMerger SubBusiness XAssetsCorp PCorp PCorp P stockCorp XstockFormer Corp X shareholders32
Reverse Subsidiary MergersCorp XMerger SubReverse Subsidiary Merger – what happens1.Merger Sub merges into Corp X, with Corp P getting Corp X stock, and the former Corp X shareholders exchanging their Corp X stock for Corp P stock2.Why is this done?
Business XBeforeAfterCorp XBusiness XCorp PCorp PCorp P stockCorp XstockFormer Corp X shareholdersCorp X stock33
Hypos1.Corp A wishes to acquire the business of Corp T. Corp T stock is worth $650 million, and its shareholders cumulatively have a tax basis of $300 million in the Corp T shares. Corp T has no debt, very little cash, and assets with a cumulative tax basis of $100 million.a)What result if Corp A buys all the shares of Corp T for $650M?b)What result if Corp A buys all the assets of Corp T for $650M?c)What other options are available to Corp A? Does this answer change if Corp T is a subsidiary of a consolidated tax group?34

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