Exam 7: Corporations Reorganizations

The year in which the ownership change occurs for a corporation, the NOL carryforward is limited not only by the § 382 annual limitation, but also by the percentage of the year remaining.

Heart Corporation has net assets valued at $1 million and an NOL of $250,000. On December 31 of last year, Heart is acquired by Brain Corporation, a calendar year taxpayer, in a restructuring qualifying as a tax-free reorganization. Heart shareholders receive 45% of Brain's shares in exchange for all of the Heart stock. Assuming that the Federal long-term tax-exempt rate is 5% and Brain's discount factor is 10%, what is the maximum amount that Brain can use of Heart's NOL this year?

In a "Type B" reorganization, the acquiring corporation obtains control by exchanging common and preferred stock in the same percentages as the target's outstanding common and preferred stock.

Which of the following statements is false?

Match the following items with the statements below. Terms may be used more than once. -Any asset other than stock or securities received by the target shareholders.

The tax treatment of reorganizations almost parallels the Federal income tax treatment for like-kind exchanges.

Liabilities are problematic only in the ____________________ reorganization when the ____________________ corporation transfers other property (boot) as well as stock to the target.