Question

P owns 20 percent of the T stock (acquired 10 years ago for $100) and A owns 80 percent (basis $200). T transfers all its assets to P solely for $1,000 FMV of P voting stock, after which time T liquidates. What are the tax consequences to each of the parties?

T is an operating company with assets worth $1,000 (basis $700) and no liabilities. T has $300 E&P. A owns some or all of the outstanding common stock of T, its only class. P is a publicly held operating company. Ignore the effect of tax on any gain recognized by T, and assume T stock is worth $10 per share. Assume the existence of good business purpose, continuity of Ts business enterprise, and a plan of reorganization exists.

Not necessarily looking for "tax amounts", but general direction of what code section or type of transaction would apply.

Answer 1

In the above case

1.p owns only 20% of the shares he can vote but with out consent of the A because the A holds 80 percent of the shares so voting of A solely for the amalgamation of the company can not be taken hence the amalgamation is invalid

2.tax consequence when the amalgamated company get liquidated then capital gain will be calculated for the the both T and A for this the base date for the calculation is purchase date of shares originally in the previous company will be taken for the indexation calculation.