Question

1. In which type of corporate reorganization do shareholders receive stock in at least two other corporations, in exchange for all of the stock in the original corporation?

a."Type B" reorganization.

b."Type A" consolidation reorganization.

c."Type D" spin-off reorganization.

d.Some other type of reorganization.

e."Type D" split-off reorganization.

2. A tax free corporate reorganization can be utilized to:

a.Create a subsidiary.

b.Combine four corporations into one.

c.Resolve management issues by dividing a company into three new companies.

d.Transfer assets in a bankruptcy.

e.All of these choices are possible.

Answer 1

1. The Answer is Option D i.e. Some other type of Reorganisation and that is "Type D" Split UP Reorganization.

Because in "Type D" Split UP Reorganization the Organisation Split up in to two or more new organisation and each new organisation will get substantially all the original assets while orignal shareholders receive stock in at least two other corporations i.e origanal stock and new stock in exchange for all of the stock in the original corporation.

2. The Answer is Option C i.e. Resolve Management Issue by dividing a company into three new companies.

Because the same will help the management to run multiple business in a very simple and effective way and tere is no tax on corporate reorganization because the new company has same shareholder as an orignal company has only by spliting orignal company in to three company will be tax free and company resolve management issue by split up.