Per IRC § 368(a)(1)(A)

Target merges directly into Buyer

• Target shareholders receive merger consideration
  in exchange for their Target stock
• Merger must be under state or federal law

• Foreign mergers, amalgamations or consolidations
  are ineligible

Because of the continuity of interest requirement,
a significant portion of the merger consideration
must be Buyer stock

• Nonvoting and preferred stock may be used
  Except for mandatorily redeemable or
  puttable preferred stock
• Escrowed stock and contingent stock can be used,
  subject to conditions
• Remaining consideration can be cash, Buyer indebtedness or any other property
• Cash election mergers can present structuring issues
• Post-acquisition, Buyer can transfer Target assets to a controlled subsidiary

M&A Tax Index