The shareholders in the target corporation always receive a tax basis in the stock received from the acquirer equal to the stock's fair market value.
The stock generally takes a substituted basis equal to the tax basis in the shareholder's stock in the target corporation.

Question

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The shareholders in the target corporation always receive a tax basis in the stock received from the acquirer equal to the stock's fair market value.
The stock generally takes a substituted basis equal to the tax basis in the shareholder's stock in the target corporation.

The Shareholders in the Target Corporation Always Receive a Tax