Rock Corporation acquires all of the assets of Stone Corporation using only its voting stock. Stone Corporation distributes the Rock stock to its shareholders pursuant to its liquidation. After the acquisition, Stone Corporation's shareholders own 20% of the Rock stock (by voting power and value). The transaction is classified as a
A) Type B reorganization.
B) Type C reorganization.
C) Type D reorganization.
D) The transaction does not qualify as a tax-free reorganization.
B) Type C reorganization.
The transaction does not meet the stock-for-stock requirements of a Type B reorganization. Since the control requirement is not met by Stone's shareholders, the transaction cannot be a Type D reorganization.
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