1. Corp A wishes to acquire the business of Corp T. Corp T stock is worth $650 million, and its shareholders cumulativel...
1. Corp A wishes to acquire the business of Corp T. Corp T stock is worth $650 million, and its shareholders cumulatively have a tax basis of $300 million in the Corp T shares. Corp T has no debt, very little cash, and assets with a cumulative tax basis of $100 million. Assume the Corp T shareholders don’t want to pay tax on their gain. Which transactions are available in the following scenarios?
a. Corp A is willing to use only its voting stock to acquire Corp T
b. Corp A wants to use its stock to acquire only 80% of Corp T, and pay cash for the rest, and it needs Corp T to continue in existence (due to valuable licenses Corp T holds)
c. Corp A wants to acquire the assets of Corp T for itself and have Corp T go out of existence
d.Corp A wants one of its subsidiaries to acquire the assets of Corp T
Homework Answers
Ans-The correct option is b.Corp A wants to use its stock to acquire only 80% of Corp T, and pay cash for the rest, and it needs Corp T to continue in existence (due to valuable licenses Corp T holds)
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1 1 of 2 r tz formed Bartz Corporation in 1989 and elected S status immediately....
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