The determination of whether a shareholder's gain qualifies for stock redemption treatment in a corporate reorganization is based on the reduction in the percentage of the stock held in the target corporation when compared to the percentage held in the acquiring corporation.

Question

Quizplus · Accepted Answer

The determination is based on whether the redemption is "substantially disproportionate" or not, which involves specific IRS criteria, not just a simple comparison of percentages held in the target and acquiring corporations.

The Determination of Whether a Shareholder's Gain Qualifies for Stock