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2. Parent Corporation ("P") creates Subsidiary Corporation ("S") by transferring P stock as a
preliminary step to acquiring the assets of Target Corporation ("T") in a separate subsidiary. T's
shareholders own stock worth $200,000 with a basis of $50,000. T has assets worth $200,000
with a basis of $100,000. (a) Assuming a valid 368(a)(2) (D) forward triangular merger, what are
the tax consequences to P, S, T and T's shareholders? (b) Assuming a valid 368(a)(2)(E) reverse
triangular merger, what are the tax consequences to P, S, T and T's shareholders? (c) What
results in (a), above, if the transaction fails to qualify as a reorganization? (d) What results in (b),
above, if the transaction fails to qualify as a reorganization?

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2. Parent Corporation (P) creates Subsidiary Corporation (S) by t.pdf

  • 1. 2. Parent Corporation ("P") creates Subsidiary Corporation ("S") by transferring P stock as a preliminary step to acquiring the assets of Target Corporation ("T") in a separate subsidiary. T's shareholders own stock worth $200,000 with a basis of $50,000. T has assets worth $200,000 with a basis of $100,000. (a) Assuming a valid 368(a)(2) (D) forward triangular merger, what are the tax consequences to P, S, T and T's shareholders? (b) Assuming a valid 368(a)(2)(E) reverse triangular merger, what are the tax consequences to P, S, T and T's shareholders? (c) What results in (a), above, if the transaction fails to qualify as a reorganization? (d) What results in (b), above, if the transaction fails to qualify as a reorganization?