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Tax C239 - Recording 3 - Topic 8 – Reorganizations test with 100- correct answers.
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Tax C239 - Recording 3 - Topic 8 – Reorganizations test with 100- correct answers.
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Tax C239 -Recording 3 -
Topic 8 –
Reorganizations
test with 100%
correct answers
What are the two methods of Corporate
Acquisition? - answer 1. Purchase Assets
from the corporation
2. Purchase Stock from the SHs
When acquiring a corporation by purchasing
assets from the corporation or shares of
stock from the SHs, what type of payment
causes the purchase to become taxable? -
,answer When using Cash or Debt to make
the purchase.
When acquiring a corporation, why is it
beneficial to buyers to purchase a
corporation's assets instead of purchasing
the stock from the SHs? - answer When the
buyer entity purchases the assets, they can
"step-up" the assets at a higher value on
their books.
During a corporate acquisition, why is it
beneficial from the seller's point of view to
sell their stock to the acquiring entity instead
of having the acquiring entity purchase the
corporation's assets? - answer This is the
seller's like to be able to sell their stock and
have a "Capital Transaction" instead of a
"Ordinary Transaction."
What is a Type A and Type C Reorganization?
- answer
When a corporation is acquired through the
purchase of its stock from shareholders,
, what happens to the corporation's tax and
legal identity? - answer The acquired
corporation retains tax and legal identity.
When a corporation is acquired through the
purchase of its stock from shareholders, how
is liquidation and merging affected? - answer
The corporation can then liquidate into itself
or merge into another entity.
When a corporation is acquired through the
purchase of its stock from shareholders, how
is the Asset Basis affected? - answer The
Asset Basis is unchanged and does not
reflect the amount paid for the shares.
When a corporation is acquired through the
purchase of its assets or stock for cash, how
does it affect the shareholder's gain or loss? -
answer The shareholder recognizes the gain
or loss on each asset individually.
Buyers like to purchase assets so that they
can
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