Exam 7: Corporate Acquisitions and Reorganizations

Table Corporation transfers one-half of its assets to Chair Corporation in exchange for 100% of Chair Corporation's single class of stock.Following the exchange,Table Corporation distributes the Chair stock ratably to its shareholders.This transaction will constitute a

Identify which of the following statements is false.

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?

Brad exchanges 1,000 shares of Goodyear Corporation stock having a $15,000 basis for Atlas Corporation stock having a $25,000 FMV as part of a Type A tax-free reorganization.Brad also receives $6,000 cash as part of the reorganization.How much gain must Brad recognize?

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

Advance rulings are required for all reorganizations.

Identify which of the following statements is true.

Roger transfers assets from his sole proprietorship to his 100%-owned Motor Corporation.Immediately after the incorporation,Motor Corporation transfers all of its assets to Blue Corporation for 10% of Blue's stock.Motor Corporation is liquidated.Which of the following statements is correct?

Identify which of the following statements is true.

Zebra Corporation transfers assets with a $120,000 basis and a $250,000 FMV to Hat Corporation for common stock worth $200,000 and cash of $50,000.The exchange qualifies as a tax-free reorganization.Zebra Corporation distributes the stock and cash to its shareholders pursuant to its liquidation.How much gain must Zebra Corporation recognize?

Identify which of the following statements is true.

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?

Martha owns Gator Corporation stock having an adjusted basis of $21,000.As part of a tax-free reorganization involving Gator and Baker Corporations,Martha exchanges her Gator stock for $18,000 of Baker stock and $6,000 (face amount and FMV)of Baker securities.What is Martha's basis in the Baker stock?

Dreyer Corporation purchased 5% of Willy Corporation's stock five years ago for $100,000.Dreyer then decides to purchase an additional 80% of the Willy stock for $1,000,000 on April 15 of the current year.On the acquisition date,Willy Corporation's liabilities are $150,000.A $300,000 tax liability is incurred by Willy on the Sec.338 deemed sale.What is the total basis of Willy Corporation's assets for Sec.338 basis allocation purposes?

Gulf Corporation wants to acquire all of Beamer Corporation's assets and liabilities in a Type C reorganization.The FMV of Beamer's assets is $500,000.Beamer's liabilities are $70,000.How much cash can Gulf Corporation use to pay for Beamer's assets without violating the Type C reorganization requirements?

Briefly describe A,B,C,D,and G reorganization types.

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

On July 1,in connection with a recapitalization of Yorktown Corporation,Robert Moore exchanges 1,000 shares of Yorktown preferred stock,which cost him $95,000,for 1,000 shares of Yorktown common stock worth $108,000 and bonds having a principal amount of $10,000 and an FMV of $10,500.What is the amount of Moore's realized and recognized gain?

Why would an acquiring corporation want an acquisition to be tax-free if it gets only a substituted basis rather than a step-up basis for the acquired assets?

Identify which of the following statements is true.