"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 ยงยง 336 and 337.


* Target exchanges substantially all its assets for voting stock of Acquiring.

* Target may receive a limited amount of boot in addition to the voting stock.

* Acquiring owns the assets of both Acquiring and Target.

* Target liquidates after the transfer, distributing Acquiring Company's stock and any retained assets.

* Target's former shareholders become shareholders in Acquiring.

Proceed to "D" Reorganization

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