Rock Corporation acquires all of the assets of Stone Corporation using only its voting stock. Stone Corporation distributes the Rock stock to its shareholders pursuant to its liquidation. After the acquisition, Stone Corporation's shareholders own 20% of the Rock stock (by voting power and value). The transaction is classified as a

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This transaction is classified as a Type C reorganization, which involves the acquisition of assets by one corporation solely for voting stock of the acquiring corporation, and the target corporation distributes the stock to its shareholders in liquidation. In a Type C reorganization, the target corporation's shareholders must own at least 80% of the acquiring corporation's stock by both voting power and value immediately after the reorganization. In this case, the target corporation's shareholders only own 20% of the acquiring corporation's stock, which means the transaction does not qualify as a tax-free reorganization.

Rock Corporation Acquires All of the Assets of Stone Corporation