For a corporate restructuring to qualify as a tax-free reorganization, the transaction must have a sound business purpose.

Question

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In order for a corporate restructuring to qualify as a tax-free reorganization, it must meet certain requirements laid out in the tax code, including having a sound business purpose. This requirement helps ensure that the transaction is not solely being carried out for tax avoidance purposes.

For a Corporate Restructuring to Qualify as a Tax-Free Reorganization