In a Reorganization, the Original Corporation Must Receive at Least

question 121

Short Answer

In a reorganization, the original corporation must receive at least 80% percent of new corporations' stock. The assets transferred to the new corporations must have been owned and conducted as a trade or business for at least years.

---

Definitions:

Fair Value

An estimate of the price at which an asset or liability could be bought or sold in a current transaction between willing parties.

Associate Company

A company in which another company owns a significant but not controlling percentage of its voting shares, typically between 20% and 50%.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net assets, representing the company's reputation, customer base, and other non-quantifiable assets.

Net Assets

The total assets of a company minus its total liabilities, representing the shareholders' equity.