Discuss the tax consequences of the following corporate reorganizations to the parties to the reorganization:
a. Adobe Corporation and Tyler Corporation merge under Florida law. Tyler shareholders receive for their Tyler stock $300,000 of Adobe common stock and $700,000 of Adobe securities.
b. Alabama Corporation exchanges $1 million of its voting common stock for all the noncash assets of Texas Corporation. The transaction meets all requirements of a Type C reorganization. Alabama then splits the acquired business into two operating divisions: meat packing and meat distribution. Alabama retains the meat packing division’s assets and continues its activities but sells for cash the assets of the meat distribution division. The meat distribution division’s assets constitute 40% of Texas’s noncash assets.
c. Parent Corporation transfers $500,000 of investment securities to Subsidiary Corporation in exchange for all its single class of stock. The Subsidiary stock is exchanged for one-third of the stock held by each of Parent’s shareholders. Six months after the reorganization, Subsidiary distributes the investment securities to its shareholders pursuant to the liquidation of Subsidiary.