Stock Acquired Through a Consolidation or Transfer

What this video covers

• How exchange ratios work in a merger or consolidation, and why the shareholder actively hands in old shares rather than passively receiving new ones
• What a qualifying tax-free reorganization does to gain recognition, cost basis, and holding period
• How boot (cash or other property) triggers partial gain recognition up to the boot amount, with the remainder deferred through adjusted basis
• Why losses are never recognized in a reorganization exchange, even when boot is received
• What the reorganization rule mandates (registration of new securities) versus what state corporate law or the charter mandates (shareholder vote)
• How spinoffs and mergers compare on direction, shareholder action, basis treatment, holding period, and loss recognition
• The four scenarios where the reorganization rule applies: mergers, consolidations, reclassifications, and asset transfers