Acquiring Corporation transfers $1 million of its voting common stock and $100,000 cash to Target Corporation in exchange for 90% of the Target assets. The assets retained by Target are used to settle its liabilities. Target then distributes the Acquiring stock and cash received to its shareholders in exchange for all of their Target shares. Target then liquidates. This restructuring qualifies as a:

Question

Quizplus · Accepted Answer

This restructuring qualifies as a "Type C" reorganization, which involves the acquisition of substantially all of the properties of a corporation in exchange for voting stock and a limited amount of other consideration (boot), followed by the liquidation of the acquired corporation.

Acquiring Corporation Transfers $1 Million of Its Voting Common Stock