Stock Acquired Through a Consolidation or Transfer

What this video covers

• How the exchange ratio works when a target shareholder swaps old shares for shares of the acquiring company, and how that differs from a spinoff
• Why the holding period of old shares tacks on to the new shares in a tax-free reorganization, preserving long-term capital gain status
• The three flavors of tax-free reorganization (Type A statutory merger, Type B stock-for-stock, Type C stock-for-assets) and exactly what consideration each one allows
• Why Type B reorganizations allow zero boot, and why Type C caps boot at 20% of the target's asset fair market value (FMV)
• What boot is, and the asymmetric rule that gain is recognized up to the boot received while a loss is never recognized in a reorganization exchange
• How to calculate recognized gain when cash sweetens the deal, and why the rest of the realized gain gets deferred through adjusted basis
• The SEC reorganization rule's dual requirement of shareholder approval and registration, and the four corporate actions it covers (mergers, consolidations, reclassifications, asset transfers)