Reference no: EM131595912

Question - Your client, ABC Corporation is looking at acquiring XYZ Corporation. The fair market value of XYZ Corporation is $1,500,000, with a net tax basis of $700,000. XYZ Corporation has a number of shareholders, more than 80% of the shareholders are willing to exchange their stock for ABC Corporation stock. The remaining 15% of the shareholders want cash or want to keep their XYZ Corporation since they love the company. XYZ Corporation used to manufacture and sell asbestos materials in Navy shipbuilding. ABC Corporation has come to you seeking guidance on the best method to acquire XYZ Corporation. They are looking for a number of avenues, with both pros and cons of each. ABC Corporation has the ability to issue shares of ABC Corporation for the acquisition or paying cash.