Detailed Answer
(c) The requirement is to determine the correct statement
concerning corporate reorganizations. Answer (b) is incorrect
because the reorganization provisions do provide for tax-free
treatment for certain corporate transactions. Specifically, shareholders
will not recognize gain or loss when they exchange stock
or securities in a corporation that is a party to a reorganization
solely for stock or securities in such corporation, or in another
corporation that is also a party to the reorganization. Thus, securities
in corporations not parties to the reorganization are always
treated as “boot.” Answer (d) is incorrect because the term “a
party to the reorganization” includes a corporation resulting from
the reorganization (i.e., the consolidated company). Answer (a)
is incorrect because a mere change in identity, form, or place of
organization of one corporation qualifies as a Type F reorganization.