11. Devitt transferred real estate to a corporation in a transaction that qualifies as a Code Section 351 transaction. The real estate was a capital asset in Devitt's hands and will also be a capital asset when held by the corporation.Devitt's basis in the real estate was $10,000 and the value of the real estate was $8,000 on the date of the transfer. Devitt received $2,000 in cash and 100 shares of stock from the corporation in exchange for the real estate. What is Devitt's basis in the stock she received and what is the corporation's basis in the real estate?

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Project One/Test One Fall 2017 All corporations are \"C\" corporations, even if not specifically stated. Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following statements concerning Type B reorganizations is not correct? a. Solely voting preferred stock may be used. b. The result is always a parent-subsidiary group. c. Solely voting stock of a corporation controlling the acquiring corporation may be used in the transaction. d. Cash may account for up to 20 percent of the consideration used to make the acquisition. 2. Pursuant to a plan of corporate reorganization in a transaction that qualified as a reorganization under Code Section 368(a)(1), Lou received the following in exchange for a share of stock with a $95 basis to Lou: One share of stock worth $65 Cash of $20 What is Lou's recognized gain or loss (if any) on this exchange? a. $0 b. $10 loss c. $10 gain d. $20 gain 3. Pursuant to a plan of corporate reorganization in a transaction that qualified as a reorganization under Code Section 368(a)(1), Pat exchanged 1,000 shares of Wood Corporation stock that she had purchased for $60,000 for 1,200 shares of Creek Corporation voting stock having a fair market value of $70,000 plus $10,000 in cash. What is Pat's recognized gain on the exchange, and what is her basis in the Creek Corporation stock, respectively? a. $10,000 gain; $60,000 basis b. $10,000 gain; $70,000 basis c. $20,000 gain; $60,000 basis d. $20,000 gain; $70,000 basis 4. Target Corporation was merged into existing Parent Corporation. As a result of the merger, Target Corporation's shareholders received common stock in Parent Corporation having a fair market value of $300,000, and non-convertible bonds of Parent Corporation having a fair market value of $700,000. What type of reorganization has taken place? a. Type A b. Type C c. Type D d. none of the above. 5. Pursuant to a Type A corporate reorganization, a bondholder exchanged an old $25,000 face value bond with a basis of $25,000, for a new bond with a face value of $30,000 and a fair market value of $35,000. What amount of gain would be recognized by the bondholder as a result of the exchange? a. $0 b. $5,000 c. $5,833 d. $10,000 6. ABC Corporation acquired 100 percent of the stock of GAP, Inc. for $500,000 in one transaction and immediately made a Code Sec. 338 election to treat the acquisition as an asset purchase. GAP's tangible assets were worth $450,000, had a basis of $300,000 and earnings and profits were $100,000. Which of the following statements is incorrect? a. GAP is subject to the recapture of cost recovery deductions on a deemed sale of its assets. b. GAP will have a basis in its assets of $300,000. c. GAP may file consolidated returns with ABC after the Code Sec. 338 election becomes effective. d. GAP may be subject to ITC recapture on the deemed sale of its assets. 7. Betty contributed to AlphaBeta Corporation a building with an adjusted basis to Betty of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. How much gain or loss, if any, does Betty recognize with respect to this transaction? a. $0. b. $10,000. c. $70,000. d. $100,000. 8. ABC, Inc. distributed land with a basis of $20,000, a fair market value of $75,000, subject to a liability of $35,000 to Alfie, a noncorporate shareholder, when the corporation's earnings and profits were $300,000. As a result of the distribution, the amount of the dividend and the shareholder's basis in the distributed property are as follows: a. Dividend: $40,000; basis: $40,000. b. Dividend: $20,000; basis: $20,000. c. Dividend: $40,000; basis: $40,000. d. Dividend: $40,000; basis: $75,000. e. None of the above is correct. 9. ABC Corporation owns 80 percent of DEF Corporation's stock and Linda owns the remaining 20 percent of DEF's stock. ABC Corporation's basis for its DEF stock is $300,000 and Linda's basis in her DEF stock is $80,000. Pursuant to a plan of complete liquidation of DEF Corporation, ABC Corporation receives property with a $400,000 adjusted basis to DEF Corporation and a $480,000 fair market value, and Linda receives property with a $130,000 adjusted basis to DEF Corporation and a $120,000 fair market value. The basis of the properties to ABC Corporation and to Linda in the property distributed to them are: a. ABC: $480,000 Linda: $120,000. b. ABC: $400,000; Linda: $130,000. c. ABC: $300,000; Linda: $80,000. d. ABC: $400,000;Linda: $120,000. 10. Henry, Hendred, and Hendel, who are brothers, own all of the stock in New Corporation with earnings and profits of $1,200,000 as follows: Henry own 1,300 shares; Hendred owns 400 shares; and Hendel owns 300 shares. New Corporation redeems 300 of Henry's shares with a basis of $60,000 for $450,000. With respect to the distribution in redemption of the stock: a. b. c. d. Henry has a capital gain of $390,000. Henry has dividend income of $450,000. Henry has dividend income of $390,000. Henry has a capital gain of $450,000. 11. Devitt transferred real estate to a corporation in a transaction that qualifies as a Code Section 351 transaction. The real estate was a capital asset in Devitt's hands and will also be a capital asset when held by the corporation. Devitt's basis in the real estate was $10,000 and the value of the real estate was $8,000 on the date of the transfer. Devitt received $2,000 in cash and 100 shares of stock from the corporation in exchange for the real estate. What is Devitt's basis in the stock she received and what is the corporation's basis in the real estate? a. b. c. d. Devitt's stock basis is $8,000; Corporation's basis in the real estate is $8,000 Devitt's stock basis is $10,000; Corporation's basis in the real estate is $10,000 Devitt's stock basis is $10,000; Corporation's basis in the real estate is $8,000 Devitt's stock basis is $6,000; Corporation's basis in the real estate is $12,000 12. Happy Corporation and Cheerful Corporation are considering a merger. Cheerful Corporation will be the surviving corporation. Cheerful Corporation will acquire Happy Corporation's tax attributes a. only if the the shareholders of both corporations agree to the acquisition of the tax attributes. b. if the transaction qualifies as a Type A reorganization. c. only if a Code Section 332 liquidation follows. d. The acquiring corporation obtains the target's tax attributes in all of the above. e. None of the above. 13. Happy Corporation and Cheerful Corporation are considering a merger. Cheerful Corporation will be the surviving corporation. Cheerful Corporation will acquire Happy Corporation's liabilities a. only if the the shareholders of both corporations consent to Cheerful Corporation's becoming liable for Happy Corporation's liabilities. b. under state law. c. only if the transaction qualifies as a Type A merger. d. only in a taxable transaction. e. None of the above. 14. Jack owns some of the stock in Cards Corporation. Jack has a basis of $25,000 in his Cards Corporation stock, which stock currently has a fair market value of $150,000. Upon the merger of Cards Corporation into Checkers Corporation, Jack receives Checkers Corporation preferred stock worth $100,000 and Checkers Corporation common stock worth $50,000. Jack recognizes a gain of a. $125,000. b. $50,000. c. $0. d. We do not have sufficient information to answer this question. 15. Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock. The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000). The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an \"A\" reorganization under Code Section 368(a)1(A). Jane paid $62,000 for the stock in Cardinal Corporation four years ago. The Janey Corporation stock is worth $60,000. Jane recognizes gain on the transaction of a. $0. b. $2,000. c. $3,000. d. $3,600. e. We do not have sufficient information. 16. Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock. The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000). The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an \"A\" reorganization under Code Section 368(a)1(A). Jane paid $62,000 for the stock in Janey Corporation four years ago. Jane's basis in the Blue Jay stock is a. b. c. d. e. $60,000. $62,000. $64,000. $66,000. We do not have sufficient information. 17. Jane, one of the shareholders of Janey Corporation, receives stock in Blue Jay Corporation (Blue Jay) and $5,000 cash in exchange for her Janey Corporation stock. The Blue Jay stock is worth $65,000. Jane paid $60,000 for the stock of Janey Corporation four years ago. The Janey Corporation stock is worth $60,000. Jane recognizes gain on the transaction of a. $0 because this qualifies as an \"A\" reorganization under Code Section 368(a)(1)(A). b. $5,000 because this qualifies as an \"A\" reorganization under Code Section 368(a)(1)(A). c. $10,000 because this does not qualify as a \"A\" reorganization or a \"B\" reorganization. d. We do not have sufficient information. e. None of the above is a correct statement. 18. Pursuant to a transaction that qualified as a \"C\" reorganization, Razors, Inc. acquired substantially all of the assets of Blades, Inc. Alice received stock in Razors, Inc. worth $8,500 plus cash of $1,000 in exchange for her 1,000 shares in Blades, Inc., in which Alice had a basis of $11,000 and which had a fair market value of $9,000. The earnings and profits of Blades, Inc. were substantial. Alice recognizes a. dividend income of $1,000. b. long-term capital loss of $1,500. c. long-term capital gain of $1,000. d. no gain or loss. 19. B2B Corporation and B2C, Inc., plan to consolidate. The plan must be approved by a. b. c. d. neither their boards of directors nor their shareholders. their boards and their shareholders. their boards only. their shareholders only. 20. As part of a transaction that qualified as a \"C\" reorganization, Blanket, Inc. transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc. of $7,000,000 and as a result of the transaction, the shareholders of Blanket, Inc. received $8,000,000 worth of stock in Pillows, Inc. and $2,000,000 in cash. As a result of this transaction, Pillows, Inc. recognizes a. gain of $3,000,000. b. no gain or loss. c. gain of $2,000,000. d. none of the above. 21. As part of a transaction that qualified as a \"C\" reorganization, Blanket, Inc. transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc. of $7,000,000 for $8,000,000 worth of stock in Pillows, Inc. and $2,000,000 in cash. The Pillows, Inc. stock and the cash was immediately distributed to the Blanket, Inc. shareholders and their stock in Blanket, Inc. was cancelled. As a result of this, Blanket, Inc. recognizes a. gain of $3,000,000. b. no gain or loss. c. gain of $2,000,000. d. None of the above. 22. LMN Inc. liquidated. Pursuant to the plan of liquidation, one shareholder, Mel, who owned 30 percent of the stock of LMN Inc., received as a distribution in exchange for all of his stock in the corporation, inventory worth $90,000 that had a basis to the corporation of $70,000. How much gain was recognized by LMN Inc. as a result of this liquidating distribution and what was the character of the gain? a. b. c. d. $0 gain. $20,000 capital gain. $20,000 ordinary income. $20,000 Section 1231 gain. 23. Ben and John formed BCD Inc., a corporation, in 2015. Ben received 80% of the voting common stock, the only class of stock and John received the remaining 20% of the stock. In 2016, Ben transferred additional property to BCD Inc. The property had an adjusted basis to Ben of $40,000 and a fair market value of $50,000 on the date of the transfer. On the same day, and in exchange for the property he transferred to BCD Inc., Ben received cash of $15,000 and additional stock worth $35,000. How much gain was recognized by Ben as a result of this transaction? a. 0. b. $10,000. c. $15,000. d. $25,000. 24. Sue transferred a building to her newly formed corporation, RSTU Inc. The building had an adjusted basis to Sue of $75,000 and a fair market value of $150,000 on the date of the transfer. The building was encumbered by a mortgage of $100,000, which RSTU Inc. assumed. On the same day, and in exchange for the building she transferred to RSTU Inc., Sue received 100 percent of RSTU Inc.'s only class of stock. The fair market value of the stock at the date of transfer was $50,000. How much gain was recognized by Sue as a result of this transaction? a. 0. b. $25,000. c. $50,000. d. $75,000. 25. Bob created MNO Inc. several years ago and has owned all 10 outstanding shares of MNO Inc. since the creation of MNO Inc. The fair market value of those shares is now $50,000. Bob's friend, Lee, owns a building having a fair market value of $80,000 and an adjusted basis to Lee of $20,000. The building is encumbered by a $30,000 mortgage. Earlier this month, Bob and Lee discussed Lee's becoming involved in the business of MNO Inc., and as a result of these discussions, Lee transferred the building to MNO Inc. and in exchange for the building, MNO Inc. transferred to Lee 10 shares of authorized but not previously issued stock of MNO Inc. After the transaction there were 20 shares of stock issued and outstanding. How much gain was realized and recognized by Lee as a result of this transaction? a. $30,000 of gain was realized and recognized. b. $30,000 of gain was realized,0 of which was recognized. c. $60,000 of gain was realized, $10,000 of which was recognized. d. $60,000 of gain was realized and recognized. 26. Al owned all of the outstanding stock of ABC Corporation. Al transferred a building, cash, and IBM stock to ABC Corporation. The adjusted basis and the fair market value of the assets transferred to ABC Corporation, and the amount remaining on the mortgage on the building transferred, were as follows. A building was transferred by Al to ABC Corporation that had an adjusted basis to Al of $20,000, a fair market value of $50,000, and a mortgage of $40,000, that was assumed by the corporation, cash in the amount of $10,000 was transferred, and IBM stock with an adjusted basis to Al of $15,000 and a fair market value of $12,000. In exchange for the assets transferred to ABC Corporation, Al received additional stock of ABC Corporation. How much gain did Al recognize as a result of this transaction? a. b. c. d. 0. $10,000. $20,000. $27,000. 27. ABC Inc. had current earnings and profits of $50,000 on June 2, 2016 when it made a nonliquidating distribution to an individual shareholder of land that the corporation held for several years as an investment. On the date the land was distributed, ABC Inc.'s adjusted basis in the land was $10,000, the fair market value of the land was $50,000, and the land was encumbered by a $30,000 mortgage. The liability was assumed by the shareholder. There were no other transactions that might affect ABC Inc.'s earnings and profits for the year. What was the amount of ABC Inc.'s earning and profits at the end of the year? a. $30,000. b. $50,000. c. $60,000. d. $70,000. e. none of the above. 28. EFG Inc. distributed land to an individual shareholder in a nonliquidating distribution. On the date the land was distributed, EFG Inc.'s adjusted basis in the land was $20,000, the fair market value of the land was $75,000, and the land was encumbered by a $35,000 mortgage, which liability was assumed by the shareholder. The corporation's earnings and profits were $245,000 on the last day of the year in which the distribution without taking into effect any impact of the distribution on the corporation's earnings and profits. As a result of the distribution, how much is the amount of dividend income to the shareholder, and what is the shareholder's basis in the distributed property? a. Dividend income of $20,000 and basis of $20,000. b. Dividend income of $40,000 and basis of $20,000. c. Dividend income of $40,000 and basis of $40,000. d. Dividend income of $40,000 and basis of $75,000. 29. XYZ Corporation had one shareholder. Pursuant to a plan of liquidation, XYZ Corporation distributed land to its sole shareholder, Jane, as a liquidating distribution. At the time of the distribution, the land had a fair market value of $120,000 and XYZ Corporation's adjusted basis in the land was $100,000. The land was encumbered by a $140,000 mortgage, and the mortgage was assumed by the shareholder. How much gain did XYZ Corporation recognize as a result of the distribution? a. 0. b. $20,000. c. $40,000. d. $100,000. 30. Pursuant to a plan of liquidation, Tom received a liquidating distribution from Furniture Corporation as part of the redemption of all of the Furniture Corporation's stock and the complete liquidation of Furniture Corporation. Tom's basis for his ABC Corporation stock was $10,000. In exchange for his stock, Tom received a payment of $15,000 and property that had an adjusted basis to Furniture Corporation of $10,000, a fair market value of $25,000, and that was encumbered by a $12,000 mortgage which Tom assumed. How much gain did Tom recognize as a result of this transaction? a. $3,000. b. $18,000. c. $30,000. d. $42,000. e. None of the above. 31. The stock of Strength Corp. is owned equally by two sisters. During 2010, they transferred land (which had a basis of $300,000 and a fair market value of $320,000) as a contribution to capital of Strength Corp. During April of 2016, Strength Corp. adopted a plan of complete liquidation and in June 2016 pursuant to the plan of liquidation made a pro rata distribution of land back to the sisters. At the time of the liquidating distribution, the land had a fair market value of $180,000. What amount of loss is allowable to Strength recognized Corp. with respect to the distribution of land? a. $0. b. $20,000. d. $120,000. d. $140,000. e. We do not have sufficient information. 32. Corporate dividends are paid a. b. c. d. at the discretion of the board of directors. when there's plenty of money to do so. at least every six months. upon demand by a majority of shareholders entitled to vote. 33. Large Corp. decides to buy all of the assets of Modest Corp. a. approval by the majority of shareholders of both corporations will be necessary to complete the transaction. b. approval by the majority of shareholders only of Modest Corp. will be necessary to complete the transaction. c. Large Corp. must assume all the liabilities of Modest Corp. when Large Corp. purchases all of the assets of Modest. d. The U.S. Justice Department's approval is always required to avoid anti-trust claims. 34. Pursuant to a Type C reorganization, Alice exchanged 1,000 shares in Blades, Inc., with a basis of $11,000 and a fair market value of $9,000 for stock in Razors, Inc. worth $8,500 and cash of $1,000. Blades earnings and profits were substantial. Alice recognizes a. dividend income of $1,000. b. long-term capital loss of $1,500. c. long-term capital gain of $1,000. d. no gain or loss. 35. Trampolines, Inc. transfers all its assets to a new corporation, Trogs, Inc., in exchange for voting stock of Trogs, Inc. The shareholders of Trampolines, Inc. turn in their Trampolines, Inc. stock for all the shares of Trogs, Inc. There is a business purpose for the transaction, and Trogs, Inc. will use all of Trampolines, Inc. assets in the same business in which Trampolines, Inc. was engaged. The transaction meets the definition of a. a Type C reorganization. b. both a Type C and a Type D reorganization. c. a Type C, D, and F reorganization. d. a Type A, C, D, and F reorganization. 36. Ivory, Inc. acquires all the assets of Mammoth, Inc. If the consideration paid is as follows, which transaction qualifies as a Type C reorganization, assuming all other requirements are met to qualify as a reorganization under Code Section 368(a)(1)(C)? a. Voting common stock of Ivory, Inc. worth $200,000 and the assumption of $800,000 of Mammoth Inc.'s liabilities. b. Voting convertible preferred stock of Ivory, Inc. with a fair market value of $550,000 and warrants with a fair market value of $450,000 to purchase stock in Ivory, Inc.'s subsidiary. c. Voting common stock in Ivory, Inc. with a fair market value of $750,000 and assumption of liabilities of Mammoth Inc. of $200,000, plus $50,000 in cash. d. Nonvoting convertible preferred stock in Ivory, Inc. worth $500,000 and cash of $500,000. 37 . The acquiring corporation does not obtain the target corporation's tax attributes in a a. Type A reorganization. b. Type B reorganization. c. Code Section 332 liquidation. d. The acquiring corporation obtains the target's tax attributes in all of the above. 38. Conway Corporation sells its entire business to Acquirer for total proceeds of S10,000. Conway Corporation's basis in its business assets is $2,000. The determination of whether the gain is taxable as ordinary income or capital gain depends on: a. the type of assets sold. b. the nature of Conway Corporation's business operations, that is, how it has used those assets. c. the holding period for the assets. d. all of the above. 39. Kim exchanges stock he owns in Cardinal Corporation for stock in Robin Corporation plus a bond worth $3,600 (principal amount of $3,000). The exchange is pursuant to a corporate reorganization of both corporations that meets all of the requirements to qualify as a reorganization under Code Section 368(a)(1). Kim paid $61,600 for the stock in Cardinal Corporation four years ago. The Robin Corporation stock is worth $60,000. Kim recognizes gain on the transaction of a. $0. b. $2,000. c. $3,000. d. $3,600. 40. In considering whether to do an A-type or a C-type reorganization, the Acquiring Corporation and the Target's stockholders should consider which of the following? a. An \"A\" reorganization has a more generous provision for the use of boot. b. An \"A\" reorganization may be less expensive and easier to document than a C-type. c. A \"C\" reorganization enables the Acquiring Corporation to more easily cherry-pick assets and liabilities of the Target. d. All of the above. 41. Holly, a shareholder in the acquired corporation in a transaction that qualified as a reorganization under Code Section 368(a)(1), turned in 100 shares of common stock of the acquired corporation with a basis of $4,200. In return Holly received voting convertible preferred stock of the acquirer corporation worth $4,700 and a debenture with a face value of $1,000 and a value of $850. As a result, Holly must recognize a gain of a. $1,350. b. $850. c. $800. d. $0. 42. Tom and Jack who are brothers each own 50 percent of the stock of Raiders, Inc. After a serious disagreement, they decide to divide the business in two. Raiders, Inc. therefore transfers half its assets to a new corporation, Doolittle, Inc., in exchange for the stock of Doolittle, Inc. and the other half of its assets to another new corporation, Minimum, Inc., also in exchange for the stock of Minimum, Inc. Both brothers turn in their Raiders, Inc. stock with one brother receiving all of the stock of Doolittle, Inc. and the other brother receiving all of the stock of Minimum, Inc. Raiders' earnings and profits at the time were $1,000,000. This transaction can best be described as a. two Section 351 transactions. b. acquisitive Type D reorganization. c. spin-off. d. tax-free split-up. 43. Arawak, Inc. acquired all the assets of Basta Inc. for $500,000 worth of its nonvoting convertible preferred stock and $200,000 in cash (to be retained by Basta Inc.). Basta Inc.'s assets had a fair market value of $700,000 and a basis to Basta Inc. of $150,000. What is Arawak Inc.'s basis in the acquired assets? a. $700,000 b. $150,000 c. $350,000 d. $200,000 e. We do not have sufficient information to answer the question. 44. Fizzy, Inc., a manufacturer of seltzer water, is going through a recapitalization that will qualify as a reorganization under Code Section 368(a)(1)(E). A bondholder exchanges a bond worth $950 with a face value of $1,000 and a basis of $875 for voting preferred stock with a par value of $1,200 and a worth of $1,000. The bondholder, on receipt of the stock, will have: a. Gain: $0; basis: $875 b. Gain: $125; basis: $1,000 c. Gain: $167 ($200 ($1,000/$1,200)); basis: $1,042 d. Gain: $75; basis: $950 45. Purr Cat Food, Inc. has earnings and profits of $50,000 and acquires Wag Dog Food, Inc. in a statutory merger that qualifies as an \"A\" reorganization. Wag Dog Food, Inc. has earnings and profits of $40,000. Soon after the merger, Purr Cat Food, Inc. distributes $60,000 to its shareholders, old and new. The amount of the distribution taxable as a dividend is a. $40,000. b. $50,000. c. $60,000. d. The \"old\" shareholders in Wag Dog Food, Inc. have dividends up to $40,000 but the \"old\" Purr Cat Food, Inc. shareholders have none. 46. Cattle, Inc. transferred part of its assets to a newly formed corporation, Herd, Inc. Herd, Inc. received assets with a basis of $40,000 and a fair market value of $90,000, but subject to a liability of $55,000. Cattle, Inc. received 100 percent of the stock in Herd, Inc. which Cattle, Inc. distributed to its shareholders in a spinoff that qualified under Code Section 355. Cattle, Inc. must recognize a gain of a. $50,000. b. $35,000. c. $15,000. d. $0. 47. Bottoms Up, Inc. merged into Flying High Corp. on August 31, 2015 in a transaction that qualified as an \"A\" reorganization. At that time, Bottoms Up, Inc. had accumulated net operating losses of $240,000. Flying High Corp.'s taxable income without regard to the acquisition this year is $360,000. Assuming Code Section 382 does not apply, the amount of Flying High Corp's taxable income that can be offset by Bottoms Up, Inc.'s net operating loss is a. $40,000. b. $120,000. c. $120,329. d. $240,000. 48. Abacus, Inc. forms a corporation, Serious, Inc., by transferring 18 percent of Abacus, Inc.'s stock to Serious, Inc. for 100 percent of the stock in Sirius, Inc. Sirius, Inc. acquires 90 percent of the stock of Tyrol, Inc. for its stock in Abacus, Inc. whereupon Serious, Inc. is merged into Tyrol, Inc., with Tyrol, Inc. surviving. Assuming this qualifies meets all of the requirements for one of the following, these transactions may best be described as a. a Section 351 transfer, followed by a Type B reorganization. b. a spin-off. c. the purchase of a subsidiary corporation. d. a reverse triangular merger. 49. Which of the following does not occur in a Type B reorganization? a. The shareholders' stock bases carry over to the acquiring corporation. b. The acquiring corporation's basis in the acquired corporation's assets depends on the value of the consideration paid. c. The acquired corporation's tax attributes generally remain in the acquired corporation. d. Neither gain nor loss is generally recognized by the corporations involved, nor is there any recapture of depreciation or investment tax credit. 50. Which of the following is not a requirement under Code Section 355 in order to qualify a transaction as a divisive Type D reorganization? a. Shareholders must not sell their stock for at least five years after the transaction. b. There must be a substantial business purpose for the transaction. c. Both the transferor corporation and the controlled corporation must be engaged in an active trade or business after the distribution. d. 80 percent control must be transferred to the transferor's shareholders