Type "A" Reorganization: Effects. Acquiring Corporation operates a rapidly expanding hotel business. At the beginning of the year, it had 3,000 shares of stock outstanding owned equally by X, Y. and Z. This year. Acquiring convinced Mr. Seller to join its ranks. Seller owned all of the stock of Target Corporation, which owned a string of motels on the Emerald Coast of Florida. Target Corporation had assets worth $600,000 (basis $175,000). Seller, who was nearing retirement, wanted cash for his company, but Acquiring convinced him to take stock and some cash as part of a merger of Seller's corporation with Acquiring. As part of the deal, Acquiring gave Seller 2,000 shares of Acquiring common stock worth $500,000 and cash of $100,000 in a transaction qualifying as a statutory merger. Seller had a basis in his stock of $10,000. Will the transaction qualify as a type "A" reorganization? Assuming that the transaction qualifies as an "A" reorganization, why might Seller want to merge his corporation with Acquiring rather than sell it? Explain. What is Seller's gain or loss recognized and what is its character? What is Seller's basis in the stock of Acquiring Corporation? What is the effect on Acquiring Corporation