Gonzalez, a U.S. citizen, owns 1% of USAco, a domestic corporation. All other shareholders of USAco are unrelated foreign persons. In a Type B reorganization, FORco transfers shares of its voting stock to USAco shareholders in exchange for 100% of the stock in USAco. Gonzalez realizes a gain on the exchange. As a renowned and reputable international tax planning consultants, Gonzalez retains your services so that he can minimize any potential tax liabilities.

• Discuss and make recommendations to him on how he can avoid the outbound-toll charge on the gain?