Corporate Reorganizations Flashcards
What is a Type A reorganization? Its provisions?
- Statutory merger where Target exchanges assets for Acquirer’s stock
- At least 50% of consideration Acquirer provides must be its stock (continuity of interest requirement)
- Shareholders of target can only defer gain/loss to extent they receive equity
- Acquirer must assume all liabilities of Target
What is a Type B reorganization? Its provisions?
- Acquisition of stock of target SOLELY in exchange for voting stock of acquiring firm
- Total ownership must be 80% after transaction
What is a Type C reorganization? Its provisions?
- Acquisition of “substantially all” (90% of net asset value 70% of gross asset value) assets of target in exchange for voting stock of acquirer
- Voting stock must be at least 80% of consideration provided
- Liabilities not considered boot here unless other boot given as well
What is a Type D reorganization? Its provisions?
-A divisive reorganization where parent transfers shares to subsidiary in exchange for subsidiary shares
What are E&F reorganizations?
-Recapitalizations and nominal changes
What are G reorganizations?
-Reorganizations related to bankruptcy recapitaizations
What is required fora tax free reorganization?
-It pass the continuity of business enterprise test
Do acquired corporations recognize gain/loss in reorganizations?
-Not generally
What basis does acquiring corporation take in assets received?
Carryover basis + gain recognized by target
If shareholders receive boot in a reorganization, what is recognized gain and how will it be treated?
-Lower of realized gain or boot received and as dividend income to extent of E&P
What is basis to shareholder in stock received in a reorganization?
Basis in stock surrendered
+Gain recognized
-Boot received
Do tax attributes survive in a reorganization?
Yes
If a target survives as a subsidiary after a stock acquisition, who gets the tax attributes?
-The target, it stays with them
