Assignment: Reorganization

Target Corporation holds assets with a fair market value of $4 million (adjusted basis of $2.2 million) and liabilities of $1.5 million. It transfers assets worth $3.7 million to Acquiring Corporation in a "Type C" reorganization, in exchange for Acquiring voting stock and the assumption of $1.4 million of Target's liabilities.

Target retained a building worth $300,000 (adjusted basis of $225,000). Target distributes the Acquiring voting stock and the building with an associated $100,000 mortgage to Wei, its sole shareholder, for all of her stock in Target. Wei's basis in her stock is $2.1 million.

a. What is the value of the stock transferred from Acquiring to Target?
b. What is the amount of gain (loss) recognized by Wei, Target, and Acquiring on the reorganization?
c. What is Wei's basis in the stock and building she received?

Requirements:

Use the attached Excel Template (Reference to the 2nd Excel Attachment) for the Critical Thinking Assignment for this week. Clearly identify the requirement being addressed. Show or explain all calculations within the body of the submission document. This means that you must use formulas and links so that your thought process can be examined. Make good use of comments to convey your thought process as well.

Attachment:- Template.rar