Angus Corporation purchased 15% of Hereford Corporation 4 years ago for $150,000. Angus acquires 75% more of Herford's stock directly from the Hereford shareholders in an exchange for 25% of the Angus common stock currently outstanding. There is still 10% of the Hereford stock held by its original shareholders as they are not interested in being common shareholders of Angus. This transaction qualifies as what type of reorganization?

Question

Quizplus · Accepted Answer

This is a Type B reorganization because Angus acquires 75% more of Hereford's stock directly from the Hereford shareholders in an exchange for 25% of the Angus common stock currently outstanding. This meets the criteria for a Type B reorganization, which involves the acquisition of stock solely for voting rights in exchange for voting stock of the acquiring corporation.

Angus Corporation Purchased 15% of Hereford Corporation 4 Years Ago