1. Acquiring Corp (Acq) is a publicly traded company with 500X shares of voting common stock outstanding (FMV = $10 per share) and $500X of accumulated E&Ps. Target Corp (T) has assets with an AB of $300,000 and a FMV $500,000, and

$100,000  of  accumulated  E&Ps.  Assume that T has no liabilities. T has 1 shareholder, TSH, who owns 100 shares with an AB of $200,000 and a FMV

$500,000. Describe the tax consequences (G/L, basis, tax attributes) to Acq, T, and TSH of the following transaction

 

1.  T merges into Acq under Delaware law, and TSH receives 40,000 shares of Acq voting stock and cash of $100,000.

 

2. Same facts as above, but Acq is worried about potential undisclosed T liabilities. Suggest an alternative acquisition structure (or 2) that uses the same Acq consideration but that mitigates the T liability issue. Note: there’s no need to work out any of the collateral consequences, e.g., basis, tax attributes; just very briefly describe the alternative structure.