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A type A Reorganization is a tax-free merger or consolidation. Generally, in a merger, one corporation (the acquiring corporation) acquires the assets and assumes the liabilities of another corporation (the target corporation) in exchange for its stock.
While other consideration besides stock can be paid under a type A reorganization, the price paid under a type B reorganization must be solely in stock. And while the target is dissolved in a type A reorganization, it can be retained in a type B reorganization.
Summary. A type A Reorganization is a tax-free merger or consolidation. Generally, in a merger, one corporation (the acquiring corporation) acquires the assets and assumes the liabilities of another corporation (the target corporation) in exchange for its stock.
In a qualifying Type A merger, the assets and liabilities of the target corporation (?Target?) must be transferred to the acquiring corporation (?Acquiror?), and the Target must dissolve by operation of law (Rev. Rul.
Disadvantages of a Type A Reorganization Legal, Accounting, and other professional fees are possible expenses. Completing this reorganization might take a while. Especially if there are several parties, assets, and obligations involved. The continuation of business operations may be delayed as a result of this.
A. In a Type A reorganization under recent Treasury? Regulations, at least? 30% of the consideration used must be the acquiring? corporation's stock. This rule permits money securities and other property to constitute up to? 70% of the total consideration used.
A Cash Election is a type of payment option available during a merger or acquisition. The target company shareholders can elect to receive cash in lieu of the acquirers stock as the merger consideration for their shareholding in the target Company.
A statutory merger is a legal process in which one company (the ?surviving? or ?acquiring? company) absorbs another company (the ?merged? or ?target? company), such that the latter ceases to exist as a separate legal entity.