In general, a voluntary bust-up or liquidation has the advantage over mergers of deferring the recognition of a gain by the stockholders of the selling company until they eventually sell the stock.

Question

Quizplus · Accepted Answer

In a voluntary liquidation, stockholders recognize gains or losses when they receive liquidation distributions, not when they sell the stock. In mergers, gains can be deferred if the transaction qualifies as a tax-free reorganization.

In General, a Voluntary Bust-Up or Liquidation Has the Advantage