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Agreement for Acquisition of Corporate Assets in Exchange for Stock (Type C Reorganization)

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Multi-State
Control #:
US-0847BG
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Word; 
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Description

Unless the IRS waives the requirement, a targeted corporation must liquidate as a condition of a Type C acquisition plan, and target-corporation shareholders become shareholders in the acquiring company. Reorganization provisions dictate tax consequences, not liquidation rules contained in Tax Code Sections 336 and 337.

An Agreement for Acquisition of Corporate Assets in Exchange for Stock (Type C Reorganization) is a legal document used to facilitate the transfer of a company's assets to another company in exchange for stock. This type of agreement is commonly used in corporate mergers and acquisitions, and is typically used when a company wants to acquire another company's assets without taking on the full liabilities of that company. The agreement will outline the terms and conditions of the asset transfer, including the exchange of stock, the exchange of cash, any liabilities that will be assumed, and other pertinent details. There are two main types of Agreement for Acquisition of Corporate Assets in Exchange for Stock (Type C Reorganization) — an Asset Purchase Agreement and a Stock Purchase Agreement. An Asset Purchase Agreement is an agreement in which the purchasing company only acquires the assets of the target company and the target company's liabilities are not assumed. A Stock Purchase Agreement is an agreement in which the purchasing company acquires the stock of the target company and assumes all the target company's liabilities.

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FAQ

The seven main types of company reorganization are mergers and consolidations, acquisitions, practical mergers, transfer spinoffs and split-offs, recapitalization, identity changes and transfers of assets.

The IRS interprets the substantially all requirement, for the purpose of issuing ruling letters, as requiring a transfer of assets representing at least 90 percent of the fair market value of the net assets and at least 70 percent of the fair market value of the corporation's gross assets held immediately before the

However, in a Type B reorganization there are no formal assumptions of the target's liabilities; the liabilities remain with the target corporation. On the other hand, in a Type C reorganization, the purchasing corporation becomes the owner of substantially all of the target's assets.

Overview. In a D reorganization, one corporation transfers all or part of its assets to another corporation. Immediately after the transfer, the transferring corporation or one or more of its shareholders must be in control of the corporation that acquired the assets.

A C reorganization is a practical merger involving an actual transfer of assets (and liabilities) of the acquired corporation (target) to the acquiring corporation.

Tax Almanac reported that the first recognized type of reorganization is a statutory acquisition or merger, wherein consolidations or mergers are both based on the acquisition of the assets of a company by another company.

reorganization, otherwise known as a ?practical merger,? is where a target. corporation (?Target?) transfers ?substantially all? of its properties to an acquiring. corporation (?Acquiror?) solely in exchange for all or a part of Acquiror's ?voting.

More info

Taxable Acquisitions – Stock Purchase. "A" reorganizations.Acquires the stock or assets of another corporation (i.e. Reverse triangular merger. In some circumstances, a taxable stock sale may make more sense. In some circumstances, a taxable stock sale may make more sense. Resulting Corporation stock distributed in exchange for Transferor Corporation stock. 368(a)(1)(C) STOCK FOR ASSETS. •. This type of tax-free reorganization is commonly referred to as a "C" reorganization. This type of tax-free reorganization is commonly referred to as a "C" reorganization.

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Agreement for Acquisition of Corporate Assets in Exchange for Stock (Type C Reorganization)