Stock-for-asset Reorganization

Stock-for-asset Reorganization

About Stock-for-asset Reorganization:

A Stock-for-asset (c-type) Reorganization is a form of reorganization in which an acquiring corporation obtains, solely for all or part of its voting stock (or its parent's voting stock), substantially all of the assets of a second corporation. The “solely for voting stock” requirement is not as strict here as in a stock-for-stock (B- type) reorganization. The acquiring corporation can take over assets subject to liabilities and can purchase the assets with some cash or property as long as the value of the assets acquired for the voting stock is at least 80% of the fair market value of all assets acquired. The target corporation must be liquidated after transferring substantially all of its assets to the acquiring corporation. Former IRC (check if this IRC provision is current here)5368(a)(1)(C).

Stock-for-stock (b-type) Reorganization.

It is a form of reorganization in which one corporation acquires at least 80% of another corporation's stock in exchange solely for all or part of its own (or its parent's) voting stock, and the acquired corporation (corporation A) becomes a subsidiary company. The only consideration for the nontax- able acquisition must be voting stock of the acquiring corporation or its parent; no money or property may be transferred or any liabilities assumed. Former IRC (check if this IRC provision is current here) §368(a)(l)(B).


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