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section 354 (or section 355) (i.e., boot) is received; the gain
recognized is not in excess of the sum of money or the fair
market value of other property received in the exchange. Section
368 sets forth definitions of corporate reorganizations that
qualify for nontax treatment under section 354(a).
Times Mirror and its advisers intended that the Bender
transaction qualify as a tax-free “reverse triangular merger”
under section 368(a)(1)(A) and (2)(E). As described by
petitioner, a reverse triangular merger is a statutory merger in
which the merged corporation (MergerSub) merges with and into the
target corporation (Bender) in exchange for stock of a
corporation (MB Parent), which, immediately prior to the merger,
controlled the merged corporation.
Respondent contends that the Bender transaction does not
qualify as a reverse triangular merger because TMD received more
than qualifying stock of MB Parent and the transaction thus fails
to satisfy the “exchange” requirement of section
368(a)(2)(E)(ii), that is: “in the transaction, former
shareholders of the surviving corporation exchanged, for an
amount of voting stock of the controlling corporation, an amount
of stock in the surviving corporation which constitutes control
of such corporation.” Section 368(c) defines “control” as “the
ownership of stock possessing at least 80 percent of the total
combined voting power of all classes of stock entitled to vote
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