Crested Serpent Eagle (CSE) Corporation Is Owned by Lin Yuan

question 78

Multiple Choice

Crested Serpent Eagle (CSE) Corporation is owned by Lin Yuan and Yu Chi. It has been in the manufacturing and lumber businesses for 20 years. For liability protection, the manufacturing assets of CSE are transferred to Serpent Corporation for all of its stock. This stock is distributed to Lin Yuan in exchange for her CSE stock. The lumber assets are transferred to Eagle Corporation for all of its stock. Yu Chi receives the Eagle stock in exchange for his CSE shares. CSE then terminates.

• A)The transaction qualifies as a spin-off "Type D" reorganization.
• B)The transaction qualifies as a split-off "Type D" reorganization.
• C)The transaction qualifies as a split-up "Type D" reorganization.
• D)The transaction is taxable.

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Definitions:

Principle of Conservation

A concept in developmental psychology that a child becomes capable of understanding that certain properties of objects, such as volume or mass, remain the same despite changes in form or appearance.

Abstract Thought

The ability to think about concepts, ideas, and principles that are not physically present or directly sensed, involving complex cognitive processing.

Cognitive Development

The process of growth and change in intellectual capabilities that influence a person's behavior and learning ability.

Basic Trust

The belief in the reliability, truth, ability, or strength of someone or something, often developed in early childhood.