Corporate Income Taxes.

One disadvantage of this type of reorganization is the dealing with dissenting shareholders if the laws in place require a consent to the deal by majority shareholders of the acquiring and acquired corporations. Some of these dissenting shareholders are difficult to deal with. Moreover, the law requires that all liabilities of the target company be assumed by the acquiring one (Ginsburg, 2012).

Type B reorganizations have the advantage of isolating the liabilities of the target in a subsidiary. As such, these commitments do not affect the principal acquiring corporation. Moreover, the assets and contracts that are deemed non-transferrable are not lost in the reorganization. Type B reorganizations are simple and easy to carry out. They involve no losses or gains by either the shareholders or the corporations involved. These reorganizations have the disadvantage that only the voting stock can be used as consideration by the acquiring company. Another disadvantage of the same is the fact that the minority shareholders of the target can bring problems to the acquiring company and its operations. Thus, for the acquiring company to be safe, it has to acquire 100% of the target company’s stock.

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The type C reorganizations have the characteristic of one company acquiring all the assets of the target. It exchanges these assets for its voting stock, as well as a limited collection of some of its other property. One of the advantages of this reorganization is the fact that the acquiring company can choose the liabilities of the target that it wants to assume. In so doing, the acquiring company is not overwhelmed with the unwanted liabilities of the acquired corporation and does not undergo much struggle in offsetting them. An acquiring company chooses the commitments that it knows it can easily meet and settle. 

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