The shareholders in the target corporation always receive a tax basis in the stock received from the acquirer equal to the stock's fair market value.

Question

Quizplus · Accepted Answer

The tax basis that shareholders in the target corporation receive in the stock from the acquirer is generally not the stock's fair market value but rather carries over from their original basis in the target corporation's stock, unless the transaction is structured to qualify as a taxable transaction where different rules might apply.

The Shareholders in the Target Corporation Always Receive a Tax