Exchanges of Multiple Stocks and Securities in Corporate Divisions or Acquisitive Reorganizations
Douglas A. Kahn
University of Michigan Law School
Jeffrey Sean Lehman
Cornell University; Peking University School of Transnational Law
Tax Notes, Vol. 104, No. 13, September 20, 2004
When a corporate division or acquisitive reorganization involves an exhange of multiple blocks of securities and stocks, an unresolved issue is how the exchanged properties are to be matched in determining the amount of gain recognized and the basis of the acquired properties. Should the exchanged properties be compared in the aggregate, or should the exchange be divided into separate segments? If divided into segments, should each segment be subject to a further division into sub-segments? How should the segmentation be determined? This article examines the different approaches that are possible, the difference in tax consequences attending each approach, and the authors' view of the best solution.
Date posted: September 18, 2004