Exam 7: Corporations Reorganizations

The yearly § 382 limitation is computed by multiplying the ____________________ of the loss corporation's stock on the change date by the ____________________. For the ____________________, the § 382 limitation must be multiplied by the fraction equal to the number of days remaining in the year divided by days in the year.

When a "Type F" reorganization includes a change from a taxable corporation to a flow-through entity, the original corporation stock loses its § 1244 status and earnings and profits do not carry over.

The acquiring corporation in a "Type G" reorganization must reduce the tax attributes carried over to it to the extent of the ____________________ relief.

The dollar value in most corporate reorganizations is ____________________. Thus, the ____________________ often dictates the form of the restructurings.

Grebe Corporation is a car dealership that has been in existence for 10 years. It has also been in the car leasing business for 6 years. Both businesses produce substantial amounts of cash, and Grebe has been investing this cash in mutual funds for the past 10 years. Grebe is interested in separating its businesses. It will create (a) new corporation(s) to receive assets in exchange for stock. Which of the following is correct regarding this transaction?

Which of the following statements is correct with regards to liabilities in corporate reorganizations?

Besides the statutory requirements for tax-free treatment for corporate reorganizations, there are several judicial requirements. Which of the following is not a judicial requirement for corporate reorganizations?

The ____________________ doctrine treats several transactions as if they were one transaction when they are all integrated. The ____________________ doctrine ensures that the restructuring has a purpose beyond tax avoidance or evasion.

In each of the following reorganizations, there is an exchange of stock for assets or stock for stock. Indicate for each reorganization the type of stock used for the exchanges, and the minimum percentage of stock that may be used for the restructurings to meet the § 368 requirements. ​ Types: A; B; C; divisive D.

Provide the formula for the § 382 limitation and demonstrate how the formula is altered for the change year. What is the purpose of the § 382 limitation?

For a "Type C" reorganization, substantially all of the assets means at least ____________________ percent of the net asset value and ____________________ percent of the gross asset value.

In which type of corporate reorganization do shareholders receive stock in at least two other corporations, in exchange for all of the stock in the original corporation?

Originally, the Supreme Court decided that corporate reorganizations were substantially continuations of the prior entities and thus should not be subject to taxation.

Match the following items with the statements below. Terms may be used more than once. -Snow Corporation, located in Washington State, establishes Rain Corporation, located in Arizona. Snow then transfers all of its assets to Rain in exchange for all of Snow's stock. After distributing the Rain stock to its shareholders, Snow liquidates.

The term "reorganization" refers to any restructuring that will be tax-free under Code section _________________________.

Which of the following statements regarding "Type B" reorganizations is true?

Match the following items with the statements below. Terms may be used more than once. -When the transactions are so interdependent that the accomplishment of one would be fruitless without the completion of the series.

When the § 382 limitation is evoked, the acquiring corporation is limited in its use of the tax loss carryover of the loss corporation. The limitation is based on the net present value of the loss corporation using the Federal long-term discount rate.

Match the following items with the statements below. Terms may be used more than once. -Jones Corporation is insolvent and under state law protection from its creditors. Its assets are transferred to Smith Corporation in exchange for all of its stock. The stock is distributed to the creditors of Jones, and the shareholders only receive stock valued at 10% of their stock.

Weaver Corporation has net assets valued at $800,000 and an NOL of $250,000. On September 30 of the current year, Weaver is acquired by Loom Corporation, a calendar year taxpayer, in a restructuring qualifying as a tax-free reorganization. Weaver shareholders receive 30% of Loom's shares in exchange for all of their Weaver stock. Assuming that the Federal long-term tax-exempt rate is 8%, what is the maximum amount of Weaver's NOL available to Loom in the current year?