If the acquiring corporation purchased 25% of target stock for cash 10 years ago, the acquiring corporation still can meet the "Type C" reorganization requirement that 80% of the target's assets be acquired with stock.

Question

Quizplus · Accepted Answer

The "Type C" reorganization requirement is that 80% of the target's assets be acquired with stock. In this case, the acquiring corporation purchased 25% of target stock for cash 10 years ago. This means that the acquiring corporation already owns 25% of the target's assets. Therefore, the acquiring corporation can still meet the "Type C" reorganization requirement by acquiring the remaining 75% of the target's assets with stock.

If the Acquiring Corporation Purchased 25% of Target Stock for Cash