"E" Reorganization
The "E" reorganization is defined as a re-capitalization - the exchanges of stock
and securities for new stock and/or securities by the corporation's shareholders.
It involves only one corporation and the re-configuration of its capital structure.
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Stock for stock
Differences in the voting rights, dividend rates, and preference on liquidation
are ignored.
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Bonds for Bonds
If the principal amount of the bonds received exceeds the principal amount of the
bonds surrendered, gain must be recognized.
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Stock for Bonds
Exchanges of stock for bonds by shareholders generally do not qualify as "E" reorganization
since the shareholders upgrade their investment position. The income is recognized
and treated as dividends or capital gains.
"F" Reorganization
"F" reorganization is defined as "a mere change in identity, form, or place of organization
of one corporation, however effected." The "F" reorganization rules normally apply
when the corporation changes its name, state of operation, or makes other changes
in its corporate charter. In such case, there is a deemed transfer from the old
corporation to the new corporation.
"G" Reorganization
"G" reorganization applies to reorganization as part of bankruptcy. It permits the
transfer of some or all of the assets of a failing corporation to a new controlled
corporation provided the stock and securities of the controlled corporation are
distributed to the old corporation's shareholders under the rules for distributions
in a "D" reorganization.
Return to Details of Patterns of Reorganization
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