Which Form 1120 C Acquired 2023-2024

We've been talking about tax-free reorganizations, and in this video, we're going to discuss the type B tax-free reorganization. A type B reorganization is a transaction that allows one corporation to acquire another corporation tax-free, with neither the target nor the purchaser nor the target shareholders incurring any kind of tax. This is done by exchanging stock for stock. Let's say we have one corporation, Flying Cat Skydiving, and you, as the director, want to acquire Surfing Kittens, a company that teaches kittens how to surf in the ocean. You want to acquire Surfing Kittens without paying any tax. You notice that the target shareholder of Surfing Kittens has 100 shares of stock with a fair market value of $100,000. You decide to give Surfing Kittens 500 shares of Flying Cat Skydiving stock, which is worth $100,000. In exchange, the target shareholder of Surfing Kittens will receive the 500 shares of Flying Cat Skydiving stock. Flying Cat Skydiving will receive the 100 shares from the target shareholder. The target shareholder will not recognize any gain and will have a substituted basis of $40,000 in the new shares. Flying Cat Skydiving will now control Surfing Kittens as a subsidiary, although it will continue to operate independently. The adjusted basis of the assets for Surfing Kittens, which is $25,000, will not be stepped up. Type B reorganizations allow for a tax-free acquisition by swapping stock for stock. However, there are important rules. Shareholder approval is generally not required for a type B reorganization, but the purchaser must have at least 80 percent control of the target immediately after the transaction. This means 80 percent of the combined voting power of all classes of voting stock and 80 percent of any non-voting stock. The consideration given must be 100 percent voting stock. There...