In a "C" reorganization, the assumption of target corporation's liabilities by the acquiring corporation can be ignored as long as boot in the form of cash or property does not exceed 20 percent of the fair market value of the assets transferred.

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In a "C" reorganization, the assumption of the target corporation's liabilities by the acquiring corporation is generally not ignored for tax purposes, and the rule regarding boot (cash or other non-qualifying property) does not provide an exception based on a 20 percent threshold of the fair market value of the assets transferred. The main concern with the assumption of liabilities in a "C" reorganization is whether it could be considered as boot itself or whether it might disqualify the transaction from being treated as a tax-free reorganization.

In a "C" Reorganization, the Assumption of Target Corporation's Liabilities