Chapter 13: Nontaxable Exchanges

01.Core Concepts

• Typically involves a restructuring of equity interests from voting common stock to nonvoting common stock in the same corporation. • A shareholder does not recognize gain or loss on the recapitalization when: • C o m m o ns t o c k i s e x c h a n g e df o r c o m m o ns t o c k i n t h es a m e corporation, or • Preferred stock is exchanged for preferred stock in the same corporation.