Description
Provide your reasoning and explain your answer as well, citing the appropriate rule(s) that apply to each situation.
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Explanation & Answer
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Running Head: REORGANIZATION TAXATION
Reorganization Taxation
Student’s Name
University Details
Date
1
REORGANIZATION TAXATION
2
Task
Determine whether the following transactions are taxable. If a transaction is not taxable, indicate
what type of reorganization is effected, if any.
a. AlphaPsi Corporation owns two lines of business that it has conducted for the last eight
years. For liability protection, AlphaPsi's shareholders decide that it would be best to
separate into two corporations. The assets and liabilities of the garbage collection
division are transferred to Alpha Corporation in exchange for all of its stock. The
manufacturing division's assets and liabilities are exchanged for all of the stock of Psi
Corporation. The Alpha and Psi stocks are distributed to the AlphaPsi shareholders in
return for all of their AlphaPsi stock. Then AlphaPsi liquidates.
b. Alpha, Inc., owns assets valued at $1 million and liabilities of $450,000. Beta
Corporation transfers $500,000 of its voting stock and $50,000 in cash for all of Alpha's
assets. Beta assumes Alpha's liabilities. Alpha distributes the Beta stock and cash to its
shareholders and then liquidates.
c. Alpha Corporation moves its headquarters and state of legal incorporation from Salem,
Oregon, to Dover, Delaware. It also changes its name to Beta, Inc.
d. Beta Company hol...
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