Question 1

Which one of the following is not a corporate reorganization as defined in the Internal Revenue Code?

Accepted Answer

A)  recapitalization 
B)  merger 
C)  mere change in identity 
D)  stock redemption 
A)  recapitalization 
B)  merger 
C)  mere change in identity 
D)  stock redemption

Question 2

Identify which of the following statements is false.

Accepted Answer

A)  Gain recognized by a shareholder in a tax- free reorganization may be characterized as a dividend. 
B)  Tax- free reorganizations generally do not involve actual redemptions of the stock of the target corporation's shareholders. 
C)  If no gain or loss is recognized by a stock or security holder in a tax- free reorganization, the stock or securities received take a substituted basis equal to the basis of the shares or securities surrendered. 
D)  The acquiring corporation does not recognize gains or losses under Sec. 1001 when it transfers noncash boot property to the target corporation or its shareholders. 
A)  Gain recognized by a shareholder in a tax- free reorganization may be characterized as a dividend. 
B)  Tax- free reorganizations generally do not involve actual redemptions of the stock of the target corporation's shareholders. 
C)  If no gain or loss is recognized by a stock or security holder in a tax- free reorganization, the stock or securities received take a substituted basis equal to the basis of the shares or securities surrendered. 
D)  The acquiring corporation does not recognize gains or losses under Sec. 1001 when it transfers noncash boot property to the target corporation or its shareholders.

Question 3

In a Type B reorganization, the target corporation exchange their stock for the acquiring corporation's voting stock, and the target corporation remains in existence as the acquiring corporation's subsidiary.

Accepted Answer

A) True 
 B)False

Question 4

Melon Corporation makes its first purchase of 30% of Hill Corporation stock on July 31 of this year. Melon Corporation uses a calendar tax year. To use the Sec. 338 election, Melon Corporation must purchase

Accepted Answer

A)  an additional 51% of Hill Corporation stock by December 31 of this year. 
B)  an additional 50% of Hill Corporation stock by December 31 of this year. 
C)  an additional 51% of Hill Corporation stock by July 30 of next year. 
D)  an additional 50% of Hill Corporation stock by July 30 of next year. 
A)  an additional 51% of Hill Corporation stock by December 31 of this year. 
B)  an additional 50% of Hill Corporation stock by December 31 of this year. 
C)  an additional 51% of Hill Corporation stock by July 30 of next year. 
D)  an additional 50% of Hill Corporation stock by July 30 of next year.

Question 5

What are the advantages and disadvantages of a Type B reorganization?

Accepted Answer

See C:7- 3

Question 6

What are the advantages and disadvantages of a merger transaction?

Accepted Answer

See C:7- 2

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  In a Type D reorganization, the existence of a good corporate business purpose is necessary before the stock of a controlled subsidiary can be distributed to the shareholders of the distributing corporation. 
B)  A distribution of a controlled corporation's stock can be a tax- free Type D reorganization, even if none of the distributing corporation's assets are transferred to the controlled corporation. 
C)  A split- off Type D reorganization occurs when part of the assets of one corporation are transferred to a controlled corporation in exchange for its stock, and shares of the controlled corporation's stock are distributed to all of the distributing corporation's shareholders without having them surrender any of their stock in the distributing corporation. 
D)  All of the above are false. 
A)  In a Type D reorganization, the existence of a good corporate business purpose is necessary before the stock of a controlled subsidiary can be distributed to the shareholders of the distributing corporation. 
B)  A distribution of a controlled corporation's stock can be a tax- free Type D reorganization, even if none of the distributing corporation's assets are transferred to the controlled corporation. 
C)  A split- off Type D reorganization occurs when part of the assets of one corporation are transferred to a controlled corporation in exchange for its stock, and shares of the controlled corporation's stock are distributed to all of the distributing corporation's shareholders without having them surrender any of their stock in the distributing corporation. 
D)  All of the above are false.

Question 8

In a nontaxable reorganization, the holding period for the stock received by the target shareholders includes the holding period of the stock surrendered.

Accepted Answer

A) True 
 B)False

Question 9

Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders is $120,000. What is Duke Corporation's basis in the assets it receives?

Accepted Answer

Duke has a

Question 10

Acquiring Corporation is 100%- owned by Peter Hart. Target Corporation is 100% owned by Dick Weber. The two individuals are not related. Target Corporation has $400,000 of NOL carryovers at the time Acquiring Corporation is considering making a cash acquisition of part or all of Target Corporation's stock. What is the maximum amount of Target stock that can be acquired in a single transaction without the Sec. 382 loss limitation rules applying to the NOLs?

Accepted Answer

A)  50% 
B)  49% 
C)  80% 
D)  Any acquisition of Target stock will cause the Sec. 382 loss limitation to apply. 
A)  50% 
B)  49% 
C)  80% 
D)  Any acquisition of Target stock will cause the Sec. 382 loss limitation to apply.

Question 11

Identify which of the following statements is true.

Accepted Answer

A)  When boot is received in a Sec. 355 spin- off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P. 
B)  A tax- free spin- off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock. 
C)  Tax- free split- offs and spin- offs coming under Sec. 355 require the surrender of shareholder stock. 
D)  All of the above are false. 
A)  When boot is received in a Sec. 355 spin- off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P. 
B)  A tax- free spin- off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock. 
C)  Tax- free split- offs and spin- offs coming under Sec. 355 require the surrender of shareholder stock. 
D)  All of the above are false.

Question 12

Brown Corporation has assets with a $650,000 basis and an $800,000 FMV. The assets are subject to $250,000 in liabilities. Clark Corporation acquires all of Brown's assets and liabilities for $600,000 in cash. Brown Corporation then liquidates. What is Clark Corporation's basis in the acquired assets?

Accepted Answer

In a taxable asset acquisition, the purc

Question 13

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Accepted Answer

A)  August 15 of next year. 
B)  June 30 of next year. 
C)  June 30 of this year. 
D)  November 30 of this year. 
A)  August 15 of next year. 
B)  June 30 of next year. 
C)  June 30 of this year. 
D)  November 30 of this year.

Question 14

Identify which of the following statements is false.

Accepted Answer

A)  A Sec. 338 election usually triggers taxation to the target corporation. 
B)  A Sec. 338 election must be made not later than the fifteenth day of the ninth month following the first stock acquisition in a series of acquisitions that leads to 80% or more stock ownership. 
C)  In a Sec. 338 deemed sale election, the shareholders of the target corporation sell their stock to the acquiring corporation. 
D)  When a Sec. 338 election is made, the target corporation is treated as having sold all of its assets at their FMV at the close of the acquisition date. 
A)  A Sec. 338 election usually triggers taxation to the target corporation. 
B)  A Sec. 338 election must be made not later than the fifteenth day of the ninth month following the first stock acquisition in a series of acquisitions that leads to 80% or more stock ownership. 
C)  In a Sec. 338 deemed sale election, the shareholders of the target corporation sell their stock to the acquiring corporation. 
D)  When a Sec. 338 election is made, the target corporation is treated as having sold all of its assets at their FMV at the close of the acquisition date.

Question 15

What are the advantages of a triangular merger?

Accepted Answer

See C:7- 2

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  A plan of reorganization must be a written document. 
B)  The IRS will issue an advance ruling on any proposed tax- free reorganization. 
C)  Advance rulings are required for all reorganizations. 
D)  All of the above are false. 
A)  A plan of reorganization must be a written document. 
B)  The IRS will issue an advance ruling on any proposed tax- free reorganization. 
C)  Advance rulings are required for all reorganizations. 
D)  All of the above are false.

Question 17

Identify which of the following statements is true.

Accepted Answer

A)  Aspect Corporation transfers assets to newly created Expert Corporation in exchange for all of Expert's stock. Shortly after the transfer, Aspect exchanges one- half of the Expert stock that it receives for land. The individuals transferring the land have never been Aspect shareholders. This transaction qualifies as a divisive Type D reorganization and is tax- free to all parties. 
B)  The control requirement for Sec. 355 differs from the control requirement under Sec. 351. 
C)  Common stock can be exchanged for preferred stock in the same corporation as a Type E reorganization. 
D)  All of the above are false. 
A)  Aspect Corporation transfers assets to newly created Expert Corporation in exchange for all of Expert's stock. Shortly after the transfer, Aspect exchanges one- half of the Expert stock that it receives for land. The individuals transferring the land have never been Aspect shareholders. This transaction qualifies as a divisive Type D reorganization and is tax- free to all parties. 
B)  The control requirement for Sec. 355 differs from the control requirement under Sec. 351. 
C)  Common stock can be exchanged for preferred stock in the same corporation as a Type E reorganization. 
D)  All of the above are false.

Question 18

Acme Corporation acquires Fisher Corporation's assets in a Type A reorganization for $800,000 of Acme's nonvoting preferred stock and $200,000 (face amount and FMV) of securities. The assets have an adjusted basis of $600,000 and an FMV of $1,500,000. In addition, Acme Corporation assumes $500,000 of Fisher's liabilities. At the time of the transfer, Acme's E&P is $400,000. Fisher distributes the stock and securities to its sole shareholder Barbara for all of her Fisher stock. After the reorganization, Barbara owns 25% of Acme's stock. Barbara has an adjusted basis of $400,000 in her Fisher stock. Barbara must recognize a gain of

Accepted Answer

A)  $0. 
B)  $650,000 capital gain. 
C)  $200,000 capital gain. 
D)  $200,000 dividend income. 
A)  $0. 
B)  $650,000 capital gain. 
C)  $200,000 capital gain. 
D)  $200,000 dividend income.

Question 19

As part of a plan of corporate reorganization, Sally exchanged 1,000 shares of Tone Corporation common stock that she had purchased for $85,000, for 3,000 shares of Fade Corporation voting common stock having an
$87,000 FMV. What is the amount and character of Sally's recognized gain and her basis in the Tone stock as a result of the exchange?

Accepted Answer

Her realized gain is $2,000 ($87,000 - $

Question 20

In a taxable asset acquisition, the purchaser does not acquire unknown and contingent liabilities.

Accepted Answer

A) True 
 B)False

Which one of the following is not a corporate reorganization as defined in the Internal Revenue Code?

Identify which of the following statements is false.

In a Type B reorganization, the target corporation exchange their stock for the acquiring corporation's voting stock, and the target corporation remains in existence as the acquiring corporation's subsidiary.

Melon Corporation makes its first purchase of 30% of Hill Corporation stock on July 31 of this year. Melon Corporation uses a calendar tax year. To use the Sec. 338 election, Melon Corporation must purchase

What are the advantages and disadvantages of a Type B reorganization?

What are the advantages and disadvantages of a merger transaction?

Identify which of the following statements is true.

In a nontaxable reorganization, the holding period for the stock received by the target shareholders includes the holding period of the stock surrendered.

Identify which of the following statements is true.

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Identify which of the following statements is false.

What are the advantages of a triangular merger?

Identify which of the following statements is true.

Identify which of the following statements is true.

In a taxable asset acquisition, the purchaser does not acquire unknown and contingent liabilities.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 7: Corporate Acquisitions and Reorganizations

Which one of the following is not a corporate reorganization as defined in the Internal Revenue Code?

Identify which of the following statements is false.

In a Type B reorganization, the target corporation exchange their stock for the acquiring corporation's voting stock, and the target corporation remains in existence as the acquiring corporation's subsidiary.

Melon Corporation makes its first purchase of 30% of Hill Corporation stock on July 31 of this year. Melon Corporation uses a calendar tax year. To use the Sec. 338 election, Melon Corporation must purchase

What are the advantages and disadvantages of a Type B reorganization?

What are the advantages and disadvantages of a merger transaction?

Identify which of the following statements is true.

In a nontaxable reorganization, the holding period for the stock received by the target shareholders includes the holding period of the stock surrendered.

Identify which of the following statements is true.

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Identify which of the following statements is false.

What are the advantages of a triangular merger?

Identify which of the following statements is true.

Identify which of the following statements is true.

In a taxable asset acquisition, the purchaser does not acquire unknown and contingent liabilities.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters