Sauce Corporation is very interested in acquiring a controlling interest in Pear Corporation, to obtain operating efficiencies. Sauce currently owns 30% of Pear, which it bought six years ago for $600,000. Sauce is a fruit processor with assets valued at $3 million and liabilities of $1 million. Pear supplies Sauce with fruit from its orchards that are valued at $4 million with $3 million in mortgages. Pear also has $60,000 in unused general business credits. Sauce has negotiated a restructuring with most of Pears shareholders. It will exchange 1 share of its stock for 2 shares of Pear. Pears founder, who own 10% of the outstanding common stock, is not willing to relinquish her stock and thus, Sauce cannot own 100% of Pear.

a. What type of reorganization is this restructuring?

b. What is the value of $60,000 business credits to Sauce Corporation assuming that the Federal long-term tax-exempt rate is 3% and Sauce uses a discount rate of 10%?