A. In a taxminusfree reorganization, the acquiring corporation's holding period for the acquired properties includes the period of time the target corporation held the properties. B. In a taxminusfree reorganization, if the acquiring corporation uses nonmonetary boot property, gains or losses will be recognized by the acquiring corporation. C. The receipt of cash by a shareholder results in the recognition of all of his or her realized gain even if the transaction qualifies as a taxminusfree reorganization. D. All of the above are false.

Question

Magdalena Case

Business

3 December, 22:37

A. In a taxminusfree reorganization, the acquiring corporation's holding period for the acquired properties includes the period of time the target corporation held the properties. B. In a taxminusfree reorganization, if the acquiring corporation uses nonmonetary boot property, gains or losses will be recognized by the acquiring corporation. C. The receipt of cash by a shareholder results in the recognition of all of his or her realized gain even if the transaction qualifies as a taxminusfree reorganization. D. All of the above are false.

+2

Answers (2)

Know the Answer?

Janiyah Serrano · Answer 1

The correct option is "D." All of the above are false.

Explanation:

The main use and advantage of a tax-free reorganization is to acquire or dispose of the assets of a business without generating the income tax consequences that would result in a straight sale or purchase of those assets

Baldie · Answer 2

A. In a tax-free reorganization, the acquiring corporation's holding period for the acquired properties includes the period of time the target corporation held the properties.

Explanation:

Companies msy undergo restructuring for several strategic reasons; which might be for operational efficiency bro be increased or to cut costs.

Reorganization may then be conducted for the organization to increase profits. A tax-free reorganization is mostly implemented to did efficiencies within the law that allows for a reduced tax and is often initiated by tactical actions such as acquisitions, takeover, buy-outs and implemented often with seller's mindset of looking to avoid income tax on any gains that have been realized.

There are four types of Tax-free Reorganizations which are

•Acquisitive Reorganizations

•Divisive Reorganizations

•Corporate restructuring Reorganizations

•Bankruptcy Reorganizations

In Acquisitive reorganizations, a corporation acquires another corporation and or can happen through stock acquisition or asset deal.

In A Acquisitive tax-free reorganization, there is transfer of all substantial target corporations assets tothe acquiring assets. So, the acquiring corporations holding period for the acquired properties includes the periods of time the target corporation held the properties in Acquisitive tax-free reorganization making option A to be true statement in regards to Tax-free Reorganization.