Tax-free reorganizations require that substantially all of the consideration received by the target's shareholders be paid in common or preferred stock.

Question

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According to the IRS, a tax-free reorganization requires that at least 50% of the consideration received by the target's shareholders be in the form of common or preferred stock. Therefore, substantially all of the consideration does not need to be paid in stock for the reorganization to be tax-free.

Tax-Free Reorganizations Require That Substantially All of the Consideration Received