Series 79 practice questionmediumMerger Types
Which merger structure allows an acquirer to secure certain tax advantages under Section 368 of the Internal Revenue Code?
- ACash-only statutory merger
- BForward triangular merger with less than 40% stock consideration
- CReverse triangular merger with at least 80% stock consideration✓ Correct answer
- DDirect asset acquisition with all-cash consideration
Explanation
Why C — Reverse triangular merger with at least 80% stock consideration
A reverse triangular merger with sufficient stock consideration (typically at least 80%) may qualify as a tax-free reorganization under Section 368. Cash-only deals do not qualify for such tax treatment.
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