Target has assets with a fair market value of $4,000,000, a basis of $1,000,000, and liabilities of $800,000. It transfers assets worth $3,800,000 to Acquiring in exchange for voting stock worth $3,000,000 and the assumption of all $800,000 of its liabilities by Acquiring. Target retains a building worth $200,000, basis of $80,000. After the exchange with Acquiring, Target distributes the voting stock in Acquiring and the building to Oprah, Targets sole shareholder, in exchange for Oprahs shares in Target. Oprah has a basis of $740,000 in her stock in Target.

Required:

(1) Does the reorganization described above qualify as a Type A reorganization? In your answer, discuss the requirements for a Type A reorganization and show supporting computations. (2) Does the reorganization described above qualify as a Type C reorganization? In your answer, discuss the requirements for a Type C reorganization and show supporting computations.

(3) Without prejudice to your answers above, assume that this transaction qualifies as a Type C reorganization. What gain, if any, is recognized by: a. Acquiring? b. Target? c. Oprah? Show supporting computations for your answers to Part (3) as appropriate.

(4) What will Oprahs basis be in her Acquiring stock? Show supporting computations.