Please answer the problem below:

Reorganization Problem 2

FACTS: T holds two business assets, X (with a basis of 30 and a value of 100) and Y (with a basis of 70 and value of 5). T also has outstanding debt of $10 (held by C). T is wholly owned by A whose basis for his T stock is 50 (with a value of $95). Acquiring Corporation P will acquire Ts assets in what is assumed to be a qualified section 368 reorganization.

If T transfers only the X business to P for $100 of P voting stock (P does not assume Ts debt to C) in a Type C reorganization. T then sells a $10 of P stock and pays off C with the proceeds. T then liquidates, distributing the $90 of P stock and the Y business (worth $5) to A. Describe the consequences of this reorganization transaction to T, Ts shareholder A & P.

a) Transferor Corporation (T)

b) Transferor Corporations shareholder (A)

c) Acquiring Corporation (P)

Textbook: Federal Income Taxation of Corporations and Shareholders, 7th Edition

Course: Taxation of Reorganizations & Liquidations

. Reorganization Problem 2: : FACTS: T holds two business assets, X (with a basis of 30 and a value of 100) and Y (with a basis of 70 and value of 5). T also has outstanding debt of $10 (held by C). Tis wholly owned by A whose basis for his T stock is 50 (with a value of $95). Acquiring corporation P will acquire T's assets in what is assumed to be a qualified section 368 reorganization. IfT transfers only the X business to P for $100 of P voting stock (P does not assume T's debt to C) in a Type C reorganization. T then sells $10 of P stock and pays. off C with the proceeds. T then liquidates, distributing the $90 of P stock and the Y business (worth $5) to A. Describe the consequences of this reorganization transaction to T, T's shareholder A & P.. Reorganization Problem 2 Workpapaer Transferor corporation (1) Transferor Corporation's-shareholder (A) .. ..(0) Acquiring Corporation (I) . Reorganization Problem 2: : FACTS: T holds two business assets, X (with a basis of 30 and a value of 100) and Y (with a basis of 70 and value of 5). T also has outstanding debt of $10 (held by C). Tis wholly owned by A whose basis for his T stock is 50 (with a value of $95). Acquiring corporation P will acquire T's assets in what is assumed to be a qualified section 368 reorganization. IfT transfers only the X business to P for $100 of P voting stock (P does not assume T's debt to C) in a Type C reorganization. T then sells $10 of P stock and pays. off C with the proceeds. T then liquidates, distributing the $90 of P stock and the Y business (worth $5) to A. Describe the consequences of this reorganization transaction to T, T's shareholder A & P.. Reorganization Problem 2 Workpapaer Transferor corporation (1) Transferor Corporation's-shareholder (A) .. ..(0) Acquiring Corporation (I)