Aqua Corporation is a retail operation specializing in pool equipment and outdoor furniture. It is very interested in merging with Icterine Corporation, a lamp manufacturer; Aqua is very profitable and Icterine has large business credits that it has not been able to utilize. Issue ID Aqua proposes to exchange about 40% of its stock and $200,000 for most of Icterine's assets. The assets not acquired by Aqua will be distributed to Icterine's shareholders. Aqua stock will be distributed to most of Icterine's shareholders, while dissenting Icterine shareholders will receive the cash. Aqua is not interested in the lamp business except for the possibility of making pool lights. It therefore will sell off Icterine's assets except those that can be retooled to manufacture pool lights. What are the tax issues to be considered in these transactions?