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17-40. Superior Corporation acquired Taylor Corporation pursuant to a statutory merger under state law.

17-40.
Superior Corporation acquired Taylor Corporation pursuant to a statutory merger under state law. As a result of the merger, Taylor Corporation's former shareholders received common stock in Superior having a value of $300,000, long-term bonds of Superior with a principal amount (and fair market value) of $500,000, and cash of $200,000. What type of reorganization has taken place? Describe the tax consequences to Taylor Corporation, its former shareholders, and Superior Corporation.

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