On January 10 of the current year, Austin Corp acquires for cash 8% of Travis Corp’s single class of stock. On August 25 of the current year, Austin makes an offer to exchange Austin common shares for the remaining Travis shares. Travis shareholders tender an additional 75% of the then outstanding Travis stock. This exchange is completed on September 25 of the current year. Austin ends up with slightly more than 83% of the Travis shares. The remaining 17% of the Travis stock is held by about 100 former shareholders of Travis Corp who own small blocks of stock.

Please draft a tax memo explaining whether one or both of the two acquisition transactions qualify as a non-taxable reorganization.

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Tax-free M&A transactions are considered "reorganizations" and are similar to taxable deals except that in reorganizations the acquirer uses its stock as a significant portion of the consideration paid to the seller rather than cash or debt.

Reorganizations, while not generally taxable at the entity level, are not completely tax-free to the selling shareholders. Reorganization is immediately taxable to the target's shareholders to the extent they receive non-qualifying consideration, or "boot"....
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