Siamese Corporation purchased 25% of Persian Corporation 8 years ago for $250,000. Siamese now wants to acquire the remaining 75% of the Persian stock. Siamese acquires 70% of Persian's stock (worth $900,000) by exchanging its common voting stock with the shareholders of Persian. Since 5% of the Persian shareholders are not interested in being common shareholders of Siamese, they retain their shares. This transaction qualifies as what type of reorganization?

Question

Quizplus · Accepted Answer

This situation qualifies as a "Type B" reorganization because it involves the exchange of Siamese's common voting stock with the shareholders of Persian. Additionally, it does not involve a taxable exchange, as no cash or other property was exchanged.

Siamese Corporation Purchased 25% of Persian Corporation 8 Years Ago