The transaction consists of these steps: Step One - American Health Corporation transfers its voting stock valued at $90 million to the Shareholders of Physicians Staffing, Inc. in exchange for all the stock of Physicians Staffing, Inc. Step Two – Physicians Staffing, Inc. liquidates and distributes its assets and liabilities to American Health Corporation valued at $80 million. The transaction qualifies as a nontaxable reorganization. 

QUESTION 

State the type of transaction as defined and described by section 368(a)(1) A/B/C/D/E/ or F and give an explanation.

1. If the IRS were to apply the step transaction doctrine to combine the two steps as one transaction.

2. If the IRS were to recognize each as a separate discrete step.

3. If in the second step, rather than liquidating Physicians Staffing, Inc., American Health Corporation merged with Physicians Staffing, Inc. in a statutory merger, and American Health Corporation survived the merger.

Classify each case whether it is included in the reorganization section 368(a)(1) A/B/C/D/E/ or F.