1

Question 1

In a fraud case, the CPA is generally liable to all:

Answer 1

reasonably foreseeable victims of the misstatement

Question 2

Consideration must be:

Answer 2

legally sufficient. This doesn’t mean fair or equal.

Question 3

A CPA can charge a contingent fee when helping a client with a claim for a refund filed solely:

Answer 3

in connection with a determination of statutory interest or penalties.

Question 4

Ultramares rule:

Answer 4

established in a 1931 case of the same name, requires privity before an accountant is liable for negligence. Other rules, such as the Restatement rule, allow foreseeable users who rely on a negligently false statement to sue.

Question 5

Sales contracts over $500 are governed by:

Answer 5

the statute of frauds. The UCC governs even the sale of a gumball

Question 6

What is the one term that must be set for a UCC contract to be enforceable?

Answer 6

acceptance. Without acceptance it’s still just a negotiation

Question 7

to be an enforceable written contract, what must the contract include?

Answer 7

the quantity of goods

Question 8

under UCC when does risk of loss pass to buyer?

Answer 8

when the goods are delivered to the carrier

Question 9

what does a principal have to do to terminate residual authority of one of its agents?

Answer 9

notify all thee agent’s known customers and publish the termination in appropriate trade journals

Question 10

details of an output contract

Answer 10

when a customer agrees to buy all their materials from one supplier. courts decided that parties probably know about how much a supplier will order, so that is enough consideration to support a contract. If a contract cant be concluded within a year of its execution it must be supported by a signed writing under the statute of frauds

Question 11

what can never be inferred?

Answer 11

quantity. price, subject matter, time for performance can all be inferred.

Question 12

who has the responsibility in a check fraud scheme

Answer 12

the party in the best position to detect the loss- so usually the company the bad checks are coming from

Question 13

If someone is going to transfer a check (order paper) to you, what two things do you need to make it valid?

Answer 13

Possession- meaning you need to actually have the check- and the person transferring it to you needs to have signed it.

Question 14

Are punitive damages available in breaches of contract?

Answer 14

NO

Question 15

what are reasonable grounds to OMIT an answer on a client’s tax return?

Answer 15

SSTS #2 says that only if both 1) the info isn’t readily available, and 2) the answer is not significant in terms of taxable income or loss

Question 16

what is the hierarchy of paying of dividing up cash to creditors/IRS after a bankruptcy?

Answer 16

1. security interests are paid first
2. child support and alimony
3. admin costs such as attorneys and accountants who helped DURING the bankruptcy
4. employee wages 3 MONTHS PRIOR
5. contributions to benefit plans
6. claims on raising or storage of grain
7. consumer deposits
8. all taxes are paid next
9. unsecured creditors who filed in a timely fashion are paid pro rata and MUST BE FULLY REPAID before anything is paid to unsecured creditors who DID NOT file in a timely fashion

Question 17

Usually, the first security interest to have priority will be the first one __________.
But what is the exception dealing with purchase money?

Answer 17

Perfected.
A purchase money security interest in NON-INVENTORY collateral has priority if it is perfected before the debtor takes possession or within 20 days thereafter.

Question 18

what type of standard for tax shelters has the IRS adopted?

Answer 18

a “more likely than not” standard- meaning if the preparer thinks it is more likely than not that the position will be upheld- they don’t need to worry about the tax return preparer penalty

Question 19

in a tenancy in common, the owners have the right to pass their interests to ________

Answer 19

their heirs through the estate

Question 20

is a purchase price and a description of the property required to have a valid deed?

Answer 20

NO- you only need a description of the property

Question 21

what is an example of a defect in the marketable title to real property?

Answer 21

an unrecorded easement

Question 22

can incidental beneficiaries sue to enforce contracts?

Answer 22

no- the parties to the contract don’t have their benefit in mind when they create the contract

Question 23

what is required for someone to file chapter 7 bankruptcy?

Answer 23

they must have debts- it can be any amount, as long as it is not an “abuse of the process”

Question 24

Things to remember when looking at bankruptcy distribution problems:

Answer 24

1- Look at the dates! Priorities change based on the dates

Question 25

claims with a “realistic possibility” of being sustained need not be:

Answer 25

disclosed. these are claims that have between a 33% and 50% chance of being sustained

Question 26

can a surety compel the creditor to collect from the primary debtor or go after the debtor’s collateral?

Answer 26

no. the surety is primarily liable upon the debtor’s default, and they can’t compel the creditor to take either of these actions

Question 27

2 ways intent can be established:

Answer 27

show that the defendant acted recklessly, or that the defendant knew of the misrepresentation

Question 28

if a person is adjudicated incompetent by a court having proper jurisdictions- all future contracts entered into by this person are:

Answer 28

VOID

Question 29

if a principal is either partially disclosed or undisclosed, is an agent personally liable for contracts entered into?

Answer 29

YES

Question 30

Under the UCC secured transactions article, what will ALWAYS prevent a security interest from attaching?

Answer 30

failure of the debtor to have rights in the collateral

Question 31

what entity handles ethical complaints that carry national implications

Answer 31

the AICPA

Question 32

the 1933 securities act applies to sales of securities, including stocks, bonds and notes that are issued for periods over ___________

Answer 32

9 months

Question 33

what is rule 505 of Regulation D of the 1933 securities act?

Answer 33

it allows a securities sale of up to 5mil in 12 months without registering with the SEC. it can only sell shares to a limit of 35 non-accredited investors but unlimited sales to accredited investors

Question 34

what is rule 506 of reg D of the 1933 securities act?

Answer 34

Rule 506 merely requires that the securities not be advertised to the general public and not be sold to more than 35 non-accredited investors. Any type of security may qualify for this exemption, including stocks and debentures. There is no limit on the dollar value of the issue, so long as the other restrictions are complied with.

Question 35

if you incorporate your business and you put all assets into the corp in exchange for stock, what % do you have to own immediately afterwards to qualify as tax free?

Answer 35

80%

Question 36

in a non-liquidating distribution of property, how do you report the transaction?

Answer 36

the same as if you’d sold the property at its fair market value. If you had stock you bought for $10 per share, and you gave it to an owner of the corp when it was worth $20 per share, you’d report $10 of capital gains per share.

Question 37

what are the tax implications to a corp and the individual if a corp has land that it bought for 20k but is now worth 25k, and the corp distributes it to an individual? (the corp still owes 10k on the land and the individual assumes the debt)

Answer 37

the corp would report a gain of 5k, and the individual reports a gain of 15k.
the individual is 15k better off than before the transaction.

Question 38

when you put property into a corp in exhange for stock, how is your basis in the stock determined?

Answer 38

it is your previous basis in the property plus any gain recognized on the property. if you had an asset you paid 100k for but is worth 150k when you transfer it, if the transfer qualifies as tax free you have basis of 100k in the stock. but if the transfer doesn’t qualify as tax free and you have a 50k gain on the transfer, then your basis in the stock is 150k.

Question 39

if an individual transfers equipment into a new corporation with a basis of 100k but a FV of 150k and the transaction is tax free, what basis does the business take in the asset

Answer 39

100k. when you transfer property into a corp and end up with 80% or more of the stock, the tax basis is retained by both parties

Question 40

when property is conveyed to an owner, whether as a liquidating distribution or not, it is recorded as:

Answer 40

as if it were sold for FMV. if it is a capital asset then there is a capital gain equal to the FMV less the basis.

Question 41

if you have preferred and common shareholders, 270k in your profits and earnings account, and you pay 200k dividends to preferred shareholders and 100k dividends to common shareholders, how do they each report them?

Answer 41

preferred report 200k of dividends, and common shareholders report 70k of dividends and 30k of nontaxable return of basis. When corporate distributions exceed earnings and profits, the earnings and profits are first allocated to the distribution made to the preferred shareholders with any remainder to the common shareholders

Question 42

what is section 1245 property?

Answer 42

personal decpreciable equipment used in a business. equipment and machinery fall into this category

Question 43

what is section 1250 property?

Answer 43

1250 property includes business land and most real property that is subject to depreciation

Question 44

how are taxes determined when a company is buying and selling its own stock?

Answer 44

it doesnt matter- a company buying and selling its own stock is nontaxable

Question 45

what are capital assets for a corporation?

Answer 45

For a corporation, capital assets are normally limited to investments in stocks, bonds, and land (held in hopes of appreciation in value). Buildings, equipment, and inventory are bought to produce revenues and do not qualify as capital assets.

Question 46

what are the threshholds and percentages for the dividends received deductions?

Answer 46

up to 20% ownership is 70%
20-80% ownership is 80%
above 80% is 100%

Question 47

what is the dividend received deduction applied to?

Answer 47

the lower of the dividend amount or the overall income amount. if operations actually lost 20k but the dividend was 100k, the dividends deduction percentage would be applied to 80k

Question 48

how do capital losses work for corporations?

Answer 48

they can be carried back 3 years and forward 5 years but they can only reduce other capital gains. they do not lower taxable income

Question 49

what rate are capital gains for corporations taxed at?

Answer 49

the ordinary tax rate for the corp. it’s not a different rate like it is for individuals. when a net capital loss is either carried back or forward it is always treated as a short term loss

Question 50

when a corp sells an asset, what would create ordinary income?

Answer 50

if an asset was bought for 50k, had dep exp of 10k, and was sold for 60k, 10k would be ordinary income and 10k would be a 1231 gain. the dep exp is recaptured through the sale.

Question 51

are dividend-received deductions allowed for non-domestic companies?

Answer 51

NO. if you get dividends from a non domestic corp it’s all taxable

Question 52

what time period are section 197 items amortized over?

Answer 52

15 years

Question 53

how are incorporation fees expensed?

Answer 53

the first 5k can be deducted in the first year, the rest is amortized over 180 months

Question 54

how are doubtful accounts treated for tax purposes?

Answer 54

the expense has to be incurred- meaning only the amount of accounts actually written off are able to be deducted

Question 55

how are charitable deductions calculated for corporations?

Answer 55

the amount deducted in one year is up to 10% of income before any dividends received deductions. this means that you would take income plus dividend income and take 10% of that, then subtract the DRD afterwards. any amount over that can be carried forward for 5 years

Question 56

a bad debt can only be deducted to the extent that:

Answer 56

it was included in income.Bad debt expense is actually the removal of a previously recognized income that was never received

Question 57

what are the 3 elements of deductible business expenses?

Answer 57

ordinary, necessary, and reasonable in amount

Question 58

what happens if a owner/employee is getting paid 300k and 50k of that is determined to be unreasonable compensation?

Answer 58

that 50k will then be taxed at a dividend but it also becomes NOT-deductible for the corp

Question 59

how is inventory treated as a charitable donation?

Answer 59

when it’s donated, the deduction amount is the lower of cost or fair value

Question 60

business gifts up to $____ per person can be deducted

Answer 60

$25

Question 61

what is the half-year convention under MACRS?

Answer 61

According to the rules of MACRS, personal property is treated as placed in service or disposed of at the midpoint of the taxable year, resulting in a half-year of depreciation for the year in which the property is placed in service or disposed of by the company.

Question 62

what is the tax treatment when there is a like-kind exchange with boot?

Answer 62

the amount taxed is the lesser of the boot received or the gain.

Question 63

when a company owns 80% or more of another, when are gains reported for tax purposes?

Answer 63

not until the gain is realized by a sale to an outside party.

Question 64

the benefit of using the installment sales method is removed by:

Answer 64

being added to taxable income as an adjustment

Question 65

what constitutes a personal holding corporation?

Answer 65

more than half of the value of the outstanding stock must be owned by five or fewer individuals at some point during the last half of the year. at least 60 percent of its ordinary income must be generated by dividends, interest, rents, royalties, and other passive income

Question 66

is interest income on state and federal government obligations included in taxable income?

Answer 66

interest from federal obligations IS taxable but interest from state obligations IS NOT taxable

Question 67

which of these are included in the gross income of the recipient during a divorce: alimony, child support, and property settlement?

Answer 67

only alimony. alimony is included in the recipient’s gross income, but child support and property settlements are not

Question 68

if someone is supposed to receive alimony and child support, but receives much less then they are supposed to during the year, how is it taxed?

Answer 68

the amount is applied to child support first. If they were supposed to get 5k during the year in child support and they received 6k total, 5k would be child support and 1k would be alimony.

Question 69

how is the exclusion ratio computed on an annuity contract?

Answer 69

you take the basis over the amount expected to be received, and then multiply that percentage by the total of the payments received that year. so if you paid 50k for an annuity and it was estimated that you would be paid out a total of 100k, your exclusion ratio is 50%

Question 70

what are the types of capital assets for individuals?

Answer 70

Capital assets for individual taxpayers are personal property, such as household furniture and tools, and investment property, such as real estate and securities such as stocks and bonds.

Question 71

how are gains and losses handled on personal and investment property for individuals?

Answer 71

Taxpayers must report gains and losses on investment property (such as their investment stocks and bonds) but only gains on personal property are reported. For example, if a taxpayer sells personal furniture at a gain, that capital gain must be reported. However, if the same personal property is sold at a loss, no deduction is allowed.

Question 72

how are short and long term capital gains and losses treated by an individual?

Answer 72

the first step is to net the short term gain and loss and the long-term gain and loss.
Then, you net the two together. A net capital loss of up to $3k can be deducted in any year in arriving at AGI, and any loss over that can be carried forward indefinitely.
Also, when netting the overal gains and losses together, whatever is bigger determines whether it’s a long term or short term

Question 73

how are gains/losses treated in related party transactions on the individual level?

Answer 73

gains are taxed but losses are not deductible

Question 74

how much capital losses can someone filing “married filing separately” deduct in a given year?

Answer 74

this filing status can only deduct $1,500 instead of the regular 3,000

Question 75

what is the treatment of non business bad debt?

Answer 75

the principal is written off in the year the loan is deemed worthless and it is considered short-term. any foregone interest is not deductible

Question 76

how is basis determined when a gift is given?

Answer 76

it’s the basis of the gift in the hands of the gift-giver

Question 77

if you inherit stock worth 10k, how much tax do you owe?

Answer 77

assets that are inherited aren’t taxable. You take a basis in them that’s the same as the fair value on the date of death.

Question 78

how are qualified dividends taxed?

Answer 78

Qualified dividends are those dividends collected from a U.S. domestic corporation or a qualified foreign corporation. To encourage investments in these companies, the dividends are taxed at the same reduced rate that applies to long-term capital gains.

Question 79

how is a like-kind exchange taxed when no cash is received?

Answer 79

the basis of the new asset is the same as the basis in the asset given up plus any cash paid, and no gain or loss is recognized

Question 80

how is a trade that is not like-kind treated for tax purposes?

Answer 80

your basis in the new asset is its fair market value, and you subtract the basis in the asset you traded and that difference is your gain

Question 81

if cash is received in a like-kind exchange what is the tax consequence?

Answer 81

a gain is recognized on whatever is the lower of the cash received or the gain on the exchange. If there was 5k received and the gain was only 3k, then a 3k gain is recognized. if the gain was 5k and cash received was 2k, then a gain of 2k is recognized

Question 82

what is the rule on excluding a gain on the sale of a primary residence?

Answer 82

If certain rules are met, a couple filing a joint return can exclude up to $500,000 of the gain on their personal residence. The structure had to be their principal residence for at least two of the most recent five years. This exclusion cannot be taken in two consecutive years.

Question 83

what are the rules for a C corp to use the cash basis of accounting?

Answer 83

c corps cant use the cash method unless their average annual gross receipts for the previous three years do not exceed 5 million. once they pass 5 million they must use accrual method for all future years

Question 84

can partnerships use the cash basis of accounting?

Answer 84

yes, as long as none of the partners are a c corp. and there are no income limits for the cash basis

Question 85

characteristics of ORDINARY ASSETS?

Answer 85

accounts and notes receivable
inventory
trade or business assets OWNED FOR A YEAR OR LESS

Question 86

characteristics of 1231 assets?

Answer 86

Trade or business assets owned for MORE than a year &laquo_space;this is the ONLY classification of a 1231 asset

Question 87

if you inherit property and the donor’s basis is higher than FMV, how is it treated when you sell the asset for tax purposes?

Answer 87

You assume the lower FMV as your basis for computing losses, and you use the donor’s higher basis for computing gains
If you sell it at a price in between the gain and loss basis, no gain or loss is recognized

Question 88

If you inherit stock and sell it within a year is it a short-term or long-term gain?

Answer 88

You assume the holding period of the donor. So if they had only had it 6 months you start at 6 months when you inherit it- if they had it 5 years and you sell it the day after you inherit it, it is still a long-term gain

Question 89

when the alternate valuation date is elected after a death, what is the basis for the property distributed?

Answer 89

it is the fair market value on the date that is six months after the date of death

Question 90

if you (an individual) have ST cap losses of 10k and LT cap losses of 10k how much can you deduct of each one in the current year?

Answer 90

3k can be deducted, and the ST losses are deducted first.

Question 91

in an involuntary conversion, how do you calculate any gain or loss?

Answer 91

the taxable gain is the LOWER of the actual gain on the transaction or the money left over after the replacement

Question 92

what is the basic hobby loss rule?

Answer 92

you have to make a profit in 3 out of the most recent 5 years. so 3 years of losses in a row means you’re engaged in a hobby not a business.
expenses related to a hobby are deductible only to the extent of revenues earned

Question 93

how are benefits under cafeteria plans taxed?

Answer 93

they are only taxable if they are received in cash

Question 94

what is the exception to the rule of stock dividends being non-taxable?

Answer 94

if the investor can choose between cash or a stock dividend, then it’s taxable.
If some owners are given common stock but some are given preferred stock, then it’s taxable to all.

Question 95

how are gambling gains/losses treated for tax purposes?

Answer 95

Winnings from gambling activities are reported within the income of the taxpayer. Losses are shown as miscellaneous itemized deductions. However, the losses deducted cannot exceed the amount of gambling winnings being reported

Question 96

is interest on United States treasury bonds taxable?

Answer 96

nterest revenue on United States treasury bonds is taxable on a federal income tax tax return. Interest revenue on US Series EE bonds is tax exempt but only when it meets specific rules: the bonds must have been purchased by the taxpayer who was over 24 years old and the proceeds must be used to pay college costs for taxpayer, spouse or a dependent. Interest revenue on state and municipal bonds are always tax free on a federal return.

Question 97

how are passive activity losses treated on an individual tax return?

Answer 97

Passive activity losses are not deductible on an individual income tax return. They are carried over and used to offset passive income in the future until used up. A passive activity is a business in which the taxpayer serves as an owner but does not materially participate in the operation. Rental activities and limited partnerships are also included in this category, regardless of the owner’s participation.

Question 98

what is the loss deductibility exception dealing with losses from rental activity?

Answer 98

passive losses on rental activities are deductible up to $25,000 as long as the owner is an active participant in the management. The deductibility of this $25,000 is lost gradually if the taxpayer’s income is especially high. Passive losses are carried forward indefinitely so that they can reduce future passive activity gains.

Question 99

if a taxpayer has a reasonably high income level but they get social security benefits, what percent of the SS is taxable?

Answer 99

usually 85%. So 85% of the SS benefits received would be included in taxable income

Question 100

what can cause a scholarship to be considered earned income?

Answer 100

if the recipient has to work as a requirement of the scholarship, such as teaching 2 classes a week

Question 101

If a couple separates and the husband gives the wife 5k before a legal separation decree is in place how is the 5k taxed?

Answer 101

It is not yet alimony so it is not taxable to the woman.

Question 102

If you have rental homes can you deduct charitable contributions from the rental revenue?

Answer 102

No. You would have your rental revenue and expenses on a schedule E of a 1040 and a charitable contribution isn’t a necessary expense of maintaining rental properties. But, you could include the charity as an itemized deduction on the schedule A of a 1040.

Question 103

how are social security benefits taxed in the income is relatively low?

Answer 103

SS benefits are not taxed if the income is low. 50% becomes taxable if the income is higher, and up to 85% can be taxable if the income level is relatively high

Question 104

are cash gifts included in taxable income?

Answer 104

no- cash received as a gift is not included in federal taxable income, although in some situations a gift tax may apply

Question 105

what is the number of days per year that determines whether a property is treated as a rental or not?

Answer 105

15 days. If a property is rented for less than 15 days, no rental income is includable and expenses attributable to the rental are not deductible. The property taxes are still deductible in full on Schedule A

Question 106

how are dividends on a life insurance policy treated for tax purpose?

Answer 106

they are not taxable. They are viewed as deduction in the expense of the policy

Question 107

what are the requirements for EE bond interest to be tax free?

Answer 107

the bonds must be issued after December 31, 1989, be purchased by the sole (or joint owner) and the buyer must be at least 24 years old when bonds are purchased. The proceeds of the bonds must be used to pay the higher education tuition and fees for taxpayer, spouse, or dependent.

Question 108

how are a C corp’s net capital losses used?

Answer 108

deducted from the corp’s ordinary income up to 3k, then carried back 3 years and forward 5 years

Question 109

what is the maximum deduction in one year for a section 1244 loss?

Answer 109

50,000- 100k if filing jointly

Question 110

what are examples of 1245 property?

Answer 110

all depreciable personal property such as equipment and machinery. under section 1245 recapture, gains are treated as ordinary income up to the amount that was depreciated.

Question 111

how does the 1231 lookback provision work?

Answer 111

1231 gains are applied to past 1231 losses and treated as ordinary income. whent the past losses are absorbed the balance is a 1231 gain.
if you have 100k of 1231 gain this year, but 80k 1231 loss last year, then 80k this year is ordinary income and 20k is a 1231 gain

Question 112

what is the statutory amortization period for a covenant not to compete that is related to business acquisition?

Answer 112

15 years

Question 113

the section 179 deduction is limited to:

Answer 113

the net income from the business

Question 114

what is the MACRS life of a non-residential real property such as an office building?

Answer 114

39 years. MACRS requires that such a building is depreciated on the straight line bassis.
BUT- the mid-month convention applies to this type of property which means no matter when it is placed into service it is considered to be mid-month.

Question 115

is debt relief considered boot?

Answer 115

yes. that and cash

Question 116

what are the 2 categories of qualified moving expenses?

Answer 116

moving the household goods, and lodging during the move. temporary living expenses are NOT deductible

Question 117

what is the rule when a taxpayer make a charitable contribution in connection with admission to an entertainment event?

Answer 117

the taxpayer can only deduct the difference between the amount paid for admission and the fair value of admission. If you pay 100 but regular admission is only 50, you can deduct 50.

Question 118

what is the rule with donating ‘ordinary income property’ to charity?

Answer 118

if you’ve owned it for less than a year the amount you can deduct is the lower of cost or market.

If you’ve owned it more than a year, then you can deduct the FMV

Question 119

what is the income percentage limit of donating long term capital gain property to charity?

Answer 119

you can only deduct up to 30% of your AGI in long term capital gain property.

Question 120

what is the gross income test amount for someone to be claimed as a dependent by someone else?

Answer 120

3,900

Question 121

how does the hope/american opportunity credit work?

Answer 121

It gives the taxpayer a credit of 100% of the first 2k and 25% of the next 2k of qualified post-secondary education expenses. So the total can be $2,500. The credit doesn’t begin phasing out for married filing jointly until the income hits 160k of AGI.

Question 122

how does the child care credit work?

Answer 122

you can get a credit for eligible childcare expenses of 35% of the the expenses if you have AGI of 15k or less. If your AGI is more than 15k, the credit goes down 1% of your expenses for every 2k of AGI above 15k, but it is not reduced to less than 20% of the expenses.

Question 123

how does the foreign income tax credit work?

Answer 123

it’s the lower of the foreign taxes paid, or the amount of US taxes that would be paid on the foreign income

Question 124

how are corporate startup costs treated for tax purposes?

Answer 124

5k of organizational costs can be deducted in the first year- anything over 50k reduces the 5k that may be deducted in the first year though.
Legal fees are allowed, but commissions paid to an underwriter are not. stock issue costs are not deductible either.

Question 125

what percentage of ownership must consent to revoke the S status of an S corp?

Answer 125

more than 50%

Question 126

what does article 2 of the UCC govern?

Answer 126

governs the sale of new and used goods, by both merchants and non-merchants

Question 127

what items are stated separately for partnership income?

Answer 127

interest income
municipal interest income
section 1231 gain
charitable donations
life insurance premiums on partner's lives
ordinary income/loss

Question 128

what is the statute of limitations on the IRS assessing additional taxes?

Answer 128

3 years unless the amount of income omitted is more than 25% of the income reported on the taxpayer’s income tax return

Question 129

if a corp has E&P of 9k and it distributes 9k of cash to its sole shareholder, and land with a FMV of 40k and a basis of 5k, what is the shareholder’s taxable income because of the transaction?

Answer 129

if a corp distributes appreciated property, its E&P goes up by the difference between FMV and its basis in the property.
So in this case, the total E&P is raised from 9k to 44k (9+35). So the shareholder has a gain of 44k and the remaining 5k is a return of capital and is nontaxable.

Question 130

what is a type A reorg?

Answer 130

a merger or consolidation under state law. it is stock for asset, the target corp dissolves

Question 131

what is a type B reorg?

Answer 131

stock for stock. Acquirer must own at least 80% of target after the transaction. Only voting stock can be used by acquiring. No boot allowed.

Question 132

what is a type C reorg?

Answer 132

stock for asset. doesn’t have to be statutory. Only voting stock and can used by acquiring. Boot is allowed but it cannot exceed 20% of the consideration provided by acquiring. Acquiring must acquire substantially all of target’s assets(90% of net asset value and 70% of gross asset value)