Gnat Corporation and Catcher Corporation would like to merge into one company. Gnat has a net value of $700,000 and Catcher's net value is $300,000. They were considering creating a new corporation called GnatCatcher, but Catcher owns valuable patents that cannot be transferred. Therefore, Gnat will transfer all of its assets to Catcher in exchange for 70% of its stock. Gnat will then liquidate by exchanging the Catcher stock with its shareholders for their stock in Gnat. Which, if any, of the following statements is correct?
A) This transaction qualifies as a "Type A" consolidation reorganization.
B) This transaction qualifies as a "Type B" reorganization.
C) This transaction qualifies as a "Type C" reorganization.
D) This transaction does not qualify as a reorganization, because Gnat, the larger corporation, rather than Catcher, the smaller corporation, ceases to exist after the transaction.
E) None of the above statements is correct.

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The Answer of Gnat Corporation and Catcher Corporation would like to merge into one company. Gnat has a net value of $700,000 and Catcher's net value is $300,000. They were considering creating a new corporation called GnatCatcher, but Catcher owns valuable patents that cannot be transferred. Therefore, Gnat will transfer all of its assets to Catcher in exchange for 70% of its stock. Gnat will then liquidate by exchanging the Catcher stock with its shareholders for their stock in Gnat. Which, if any, of the following statements is correct?
A) This transaction qualifies as a "Type A" consolidation reorganization.
B) This transaction qualifies as a "Type B" reorganization.
C) This transaction qualifies as a "Type C" reorganization.
D) This transaction does not qualify as a reorganization, because Gnat, the larger corporation, rather than Catcher, the smaller corporation, ceases to exist after the transaction.
E) None of the above statements is correct.

Gnat Corporation and Catcher Corporation Would Like to Merge into One