Farmer John and his wife and 3 children own common stock in Brewer Farms, Inc (BFI). This 100 acre farm has been in the family for 5 generations. Due to the booming craft beer industry in Virginia, BFI focused on growing grains used in brewing beer; wheat, hops, and barley that was sold to brewers throughout Virginia. Ten years ago, Farmer John’s 3 children decided they wanted to try their hand at brewing craft stouts and IPAs. The brewing activities at BFI became very successful and prosperous. Due to the costs associated with the advanced machinery used in farming large properties and shrinking profit margins, neighboring farms approached BFI about combining all the farms into one Virginia Limited Liability Company that would file a Form 8832 to be treated as a corporation for US Federal tax purposes. BFI, without regard to its brewing activities, is larger than all the neighboring Farms combined and would be necessary to make the new farming company profitable. Farmer John and his wife are in their late 60s and their children are not interested in actively participating in the farming business. The neighboring farmers are not interested in the brewing activities of BFI and are concerned about potential liabilities related to selling beer for consumption to various bars and restaurants in Virginia.

Farmer John's attorney prepared a plan of reorganization that included a Separation Agreement and a Transfer and Liquidation Agreement. Pursuant to the Separation Agreement, BFI incorporated a subsidiary, Virginia Brewing Company (VBC) with BFI transferring all the assets and liabilities related to the brewing business to VBC. The separation agreement then provided that the stock of VBC be distributed to Farmer John’s children based upon their individual percentage ownership of BFI in exchange for the children’s stock in BFI. After the execution of the Separation Agreement, Farm John and his wife will own all the stock of BFI and Farmer John’s children will own all the stock of VBC.

The attorney then prepared a Transfer and Liquidation Agreement pursuant to which BFI would transfer all of its assets and liabilities related to the farming business to a newly formed limited liability company, Virginia Farms, LLC (VF LLC), for Class A membership interests in the LLC with the right to appoint 2 out 5 members of the membership board. The neighboring farmers would transfer the assets and liabilities of their respective farming business to VF LLC for Class B membership interests with the right to appoint 3 out 5 members of the membership board. After the transfers, BFI will liquidate by distributing the VF LLC Class A membership interests to Farmer John and his wife.

Question: Is the Transfer and Liquidation Agreement qualify as a type C tax-deferred reorganization? What modifications could increase the confidence level in agreement's qualification?