Question 3)

A owns all the stock of T Corp.The only asset of T Corp. is land worth $150,000 with a basis of $60,000.A's basis in T's stock is $50,000.T Corp is a C Corporation for federal income tax purposes.Y Corp, a publicly traded company, wishes to purchase the land with either $150,000 of Y Corp stock in a taxable transaction or $130,000 of Y Corp stock in a non-taxable transaction.

A)Can A avoid gain recognition by a like kind exchange of T Corp stock for Y Corp stock?

B)Can you think of any scenario in which the transaction could be tax-free?

C)What would be the tax ramifications if T Corp accepts the taxable transaction, and immediately liquidates?The effective tax rate for T Corp is 20% and for A is 35% for ordinary income and 15% for capital gains.

D)Would you answer to C be different if T Corp was an S Corporation?

E)Why is Y Corp willing to give only $130,000 worth of stock for a tax-free exchange?

you have to be familiar with taxable and not taxable mergers or acquisitions. Once again use code sections to support answers.

Thank you