Ocelot Corporation is merging into Tiger Corporation under state law requirement

Question

Ocelot Corporation is merging into Tiger Corporation under state law requirements. Ocelot transfers assets worth $300,000 to Tiger. Ocelot receives 30,000 shares of Tiger d stock and $200,000 cash. Ocelot transfers the Tiger stock, $200,000 cash, and all of its liabilities ($50,000) to its shareholder, Van, in exchange for all of his Ocelot stock (basis 100 $100,000) Ocelot then liquidates. How is this transaction treated for tax purposes? on Select one Since this qualifies as a "Type A reorganization, Van recognizes no gain. Since this qualifies as a "Type C" reorganization. Van recognizes a $200,000 gain. O c ?. Since this qualifies as a "Type A" reorganization, Van recognizes a $150,000 gain. O d Since this does not qualify as a reorganization, Van recognizes a $150,000 gain.

Explanation / Answer

( C) Since this qualifies as a “Type A” reorganization, Van recognizes a $150,000 gain." is correct Calculation Cost of Assets        300,000 Cash        200,000 Shares        100,000        300,000 Van ' Sahres Consideration        100,000 Cash        200,000 Liabilities           50,000        250,000 Gain        150,000

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