List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 1.338-2 Miscellaneous issues under section 338. 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.