Section 39 Qualified Stock Purchase

• Library: Business Transitions 2009 Supp

A merger of an acquisition subsidiary into a target corporation followed by the target corporation’s merger into the parent/acquiror corporation is treated as a qualified
stock purchase under I.R.C. § 338 and a liquidation under I.R.C. § 332, and not as a purchase of assets. If the two steps are integrated under the step transaction doctrine, they do not qualify as a reorganization because:

• less than 80% of the assets were acquired solely for voting stock (because of the cash consideration received and...