Reference no: EM131750224
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.
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