P, T, and X are domestic corporations. T and X each operate a trade or business. The total adjusted basis of T's property exceeds the sum of T's liabilities plus the amount of liabilities to which T's property is subject. P purchases all of A's T stock for cash in a qualified stock purchase. In the merger, all of T's assets are transferred to X. P and K receive X stock in exchange for their T stock.
P intends to retain the stock of X indefinitely.
In addition, all of T's assets are transferred to X in the merger and P and K receive the X stock exchanged therefor in pursuance of the plan of reorganization. X succeeds to and takes into account the items of T as provided in section 381. Pursuant to that reorganization, P exchanges its T stock solely for stock of X, a party to the reorganization. Thus, P recognizes no gain or loss on the exchange. Under section 358, P's basis in the X stock received in the exchange is the same as the basis of P's T stock exchanged therefor.