Continuity of interest as it relates to a tax reorganization focuses on the aggregate equity received by the shareholders of the target corporation in the transaction.
The regulations require the target shareholders to receive, in the aggregate, stock with a fair market value of at least 40 percent of the value of the property transferred in the exchange.

Question

Quizplus · Accepted Answer

This is a true statement regarding continuity of interest in a tax reorganization. The regulations do require the target shareholders to receive, in the aggregate, stock with a fair market value of at least 40 percent of the value of the property transferred in the exchange to maintain continuity of interest.

Continuity of Interest as It Relates to a Tax Reorganization