Extract to table

Under Section 368(a)(2)(E), the former stockholders of Pennfield must exchange, in the transaction, an amount of Pennfield stock constituting "control" (80%) solely for "voting stock" of the controlling corporation

The Service has consistently held that the former stockholders of the surviving corporation must exchange stock representing "control" for voting stock of the acquiring entity; here, only 2

Under each Rollover Agreement, the management participant agrees to contribute a specified number of Pennfield shares (having an aggregate fair market value, at $15

Additionally, the "immediately after the exchange" requirement under Section 351(a) must be satisfied, meaning that the transferor group must be in control of the post-closing entity immediately after the exchange

Unlike Section 351, Section 721 does not impose any ownership percentage threshold that must be satisfied by the contributing partner or group of partners

95 per-share fair market value at the time of contribution (assuming the participants acquired their shares through compensation arrangements or at lower historical prices), which would create a "built-in gain" that must be allocated to the contributing partner under Section 704(c) when the partnership subsequently sells or disposes of the contributed shares