"C" Reorganization

The target corporation must liquidate as part of the plan of reorganization unless the IRS waives this requirement.' As a result, the shareholders of the target corporation become shareholders in the acquiring corporation. In determining the tax consequences to the liquidating target, the reorganization provisions govern-not the liquidation rules of §§ 336 and 337.

Explanation:

1. Target exchanges substantially all its assets for voting stock of Acquiring.
2. Target may receive a limited amount of boot in addition to the voting stock.
3. Acquiring owns the assets of both Acquiring and Target.
4. Target liquidates after the transfer, distributing Acquiring Company's stock and any retained assets.
5. Target's former shareholders become shareholders in Acquiring.

Proceed to "D" Reorganization