Widget Corporation has 100 shares of voting common stock outstanding, which are owned 50 shares by Alexa (adjusted basis $200), 30 shares by Bernard (adjusted basis $400) and 20 shares by Curtis (adjusted basis $150). Widget Corporation owns the following assets:

BasisFMV

Nonoperating assets$200$300

Operating assets$700$900

Totals$900$1,200

Widget owes $200 (in the form of 20-year bonds held by Ligget Corporation with an adjusted basis of $190) and has E&P of $200. Assume that each Widget share is worth $10 and that property exchanged therefor is worth $10. Assume that each transaction has a proper business purpose, there is a continuity of Widget's business enterprise, the transaction is pursuant to a plan of reorganization and the face amount of debt is its FMV.XYZ Corporation is a publicly held corporation whose stock is traded on the New York Stock Exchange (NYSE).What are the tax consequences to Alexa, Bernard, Curtis, Ligget Corporation and XYZ Corporation?

a.On January 2 of the current year, XYZ Corporation acquires all of the Widget Corporation common stock from Alexa, Bernard and Curtis, as a result of separate negotiations with each shareholder, solely in exchange for voting preferred stock of XYZ.

b.Assume instead that Widget is a public company, and that XYZ acquires 100% of Widget's stock by a public tender offer (cash) and immediately liquidates Widget.

c.Assume for b. that XYZ also purchases the Widget bonds from Ligget for $200 cash.

d.Assume instead for b. that XYZ swaps its own 15-year registered bonds for the Widget bonds held by Ligget.

e.Assume in b. above, that XYZ also agrees to advance $100 in cash to Widget.