After a tax-free reorganization,the remaining corporation may not combine the earnings and profits (E & P)of the acquiring and target corporations.The E & P of the acquiring corporation may be used for dividend payments only after the target corporation's E & P are fully utilized.

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After a tax-free reorganization,the remaining corporation must combine the E & P of the acquiring and target corporations if both amounts are positive.

After a Tax-Free Reorganization,the Remaining Corporation May Not Combine the Earnings