Exam 7: Corporations: Reorganizations

The ____________________ provides a restriction on the amount of tax attributes that can be carried over from the target to the acquiring corporation after an ownership shift occurs.

A shareholder bought 2,000 shares of Zee Corporation for $90,000 several years ago. When the stock is valued at $200,000, Zee redeems these shares in exchange for 6,000 shares of Yea Corporation stock. This transaction meets the requirements of § 368. Which of the following statements is true with regard to this transaction?

ScottishCo is owned by Gordon Bryson and his four nieces and nephews. Gordon owns all the voting stock. He wants to relinquish control; accordingly, ScottishCo redeems all of Gordon's voting common stock and issues him preferred stock and $50,000 in bonds. The nonvoting preferred shares owned by the nieces and nephew are exchanged for voting common stock. Which of the following statements is correct?

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.

Which of the following is not a requirement for receiving tax-free treatment for a corporate reorganization?

Without evidence to the contrary, the IRS views transactions occurring within one year of a reorganization as part of the restructuring.

The "Type F" is the mere change in ____________________, ____________________, or _________________________. or

In a ____________________ divisive reorganization the original distributing corporation disappears. In a ____________________ divisive reorganization the shareholders do not give up any of their original corporation stock to receive stock in the new corporation, whereas in a ____________________ stock in the original is exchanged for stock in the new corporation.

For corporate reorganizations, the tax laws should be considered while planning the structure of the reorganization.

One of the tenets of U.S. tax policy is to encourage business development. Which of the following Code sections does not support this tenet?

Discuss the influence of step transaction, sound business purpose, continuity of business enterprise, and continuity of interest doctrines on tax-free corporate reorganizations.

Which of the following statements is false regarding the tax benefits from a loss corporation's carryovers that are taken in the current year?

An exchange of common stock for preferred stock or bonds for preferred stock can qualify as a "Type E" reorganization.

Present Value Tables needed for this question. Sauce Corporation is very interested in acquiring a controlling interest Pear Corporation, to obtain operating efficiencies. Sauce currently owns 30% of Pear, which it bought six years ago for $600,000. Sauce is a fruit processor with assets valued at $3 million and liabilities of $1 million. Pear supplies Sauce with fruit from its orchards that are valued at $4 million with $3 million in mortgages. Pear also has $60,000 in unused general business credits. Sauce has negotiated a restructuring with most of Pear's shareholders. It will exchange 1 share of its stock for 2 shares of Pear. Pear's founder, who own 10% of the outstanding common stock, is not willing to relinquish her stock and thus, Sauce cannot own 100% of Pear.

Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $2 per share and $100,000 cash. Wanda, the sole shareholder of Mars, surrenders her Mars stock (basis $900,000) and receives all of the Jupiter stock transferred to Mars plus the $100,000. How does Wanda treat this transaction on her tax return?

Compare an acquisitive "Type D" reorganization with the "Type C" reorganization.

Compare the consideration that can be used in "Type A," "Type B," and "Type C" reorganizations.

The continuity of interest requires that all target shareholders receive some acquiring stock.

One of the tenets of the U.S. tax policy is to ____________________ business development. As an extension of this concept, corporate restructurings are given ____________________ treatment.

To qualify as a tax-free reorganization, a corporate restructuring must meet not only the specific requirements of § 368 but also four general requirements. These four requirements are: ____________________, ____________________, ____________________, and _________________________. In addition, the ____________________ doctrine should not apply to the reorganization. or