Reference no: EM131811665

For each of the three scenarios below please answer the following questions.

a. Is the transaction taxable?

b. If not, indicate the type of reorganization.

c. In 2 or 3 sentences, support your decision. For example, if you state the transaction is a Type B reorganization, explain why the transaction qualifies as a Type B reorganization.

1. Red Corporation owns assets valued at $500,000 and liabilities at $200,000, and White Corporation has assets valued at $1 million and liabilities of $150,000. Red transfers 75% of its voting stock to White in exchange for 90% of its assets. White distributes the Red stock, its own remaining assets, and all of its liabilities to the White shareholders. White then liquidates.

2. Green Corporation holds assets valued at $600,000 and liabilities of $150,000. Blue Corporation transfers $540,000 of its voting stock for 90% of Green's assets. Blue assumes none of Green's liabilities. Green distributes the Blue stock, its own retained assets, and its liabilities to the Green shareholders and then liquidates.

3. Orange owns assets valued at $400,000 and liabilities of $100,000. Yellow Corporation exchanges $200,000 of its voting stock and land worth $100,000 for all of Orange's assets and liabilities. Orange distributes the Yellow stock to the Orange stockholders and retains the land.