oblems (90 points - You must show calculations to receive full credit 6. Purple Corporation is acquiring Gray Corporation in a transaction that qualities as a $368 reorganization by exchanging $650,000 of stock and two parcels ((Parcel 1 FMV S350,000 Basis $50,000); (Parcel 2 FMV $250,000 - Basis $100,000) for all of Gray's assets (Stock- $450,000 and land (FMV of $500,000 and basis of $350,000) and liabilities of $175,000. Gray also has 200,000 of Earnings & Profits. Gray sells parcel #1 for its FMV and uses proceeds to compensate employees who are losing their jobs. Gray then liquidates, transferring the stock received and other land (parcel 2) to its shareholders. What are the tax consequences of the reorganization to all parties (the acquiring corporation, the target corporation and the shareholders of Gray Corporation)? Acquiring Corp Target Corp Shareholders Stock Land 1 Basis Land 2 Basis Stock FMV Basis E&P Liab New Land Old Realize Gain Realize Gain Shareholders Realized Gain Recognize Gain Recognize Gain Shareholders Recognize Gain Basis Basis Basis Character of Gain To Shareholder Character of Gain to Target oblems (90 points - You must show calculations to receive full credit 6. Purple Corporation is acquiring Gray Corporation in a transaction that qualities as a $368 reorganization by exchanging $650,000 of stock and two parcels ((Parcel 1 FMV S350,000 Basis $50,000); (Parcel 2 FMV $250,000 - Basis $100,000) for all of Gray's assets (Stock- $450,000 and land (FMV of $500,000 and basis of $350,000) and liabilities of $175,000. Gray also has 200,000 of Earnings & Profits. Gray sells parcel #1 for its FMV and uses proceeds to compensate employees who are losing their jobs. Gray then liquidates, transferring the stock received and other land (parcel 2) to its shareholders. What are the tax consequences of the reorganization to all parties (the acquiring corporation, the target corporation and the shareholders of Gray Corporation)? Acquiring Corp Target Corp Shareholders Stock Land 1 Basis Land 2 Basis Stock FMV Basis E&P Liab New Land Old Realize Gain Realize Gain Shareholders Realized Gain Recognize Gain Recognize Gain Shareholders Recognize Gain Basis Basis Basis Character of Gain To Shareholder Character of Gain to Target