In the merging and reorganization of corporations,  one company agrees to purchase another, or two companies decide to merge. What are the tax consequences of such transactions? As we've learned and revisited again and again, transactions between unrelated parties, such as two corporations, are generally fully taxable, and the parties involved will generally recognize gain or loss on these transactions as a result. Does this general rule apply to corporate mergers and reorganizations as well? If not, why and how?