Flower Corporation has two divisions that it has operated for the last 10 years: Gerbera with a value of $806,000 (basis $400,000) and Daisy with a value of $744,000 (basis 800,000). While Gerbera is profitable, Daisy continues to incur losses and created a $350,000 NOL for Flower two years ago. Flower has decided it would like to become two corporations: Gerbera and Daisy. Which of the following is the best method for Flower to become two corporations?
a. Under a § 351 creation of a corporation, Flower transfers all of the Daisy division assets and the NOL to the new corporation (Daisy) for all of its stock. Flower retains the stock and Daisy becomes a subsidiary without limitations on its NOL use.
b. Using a spin-off, Flower transfers the Daisy division assets to the new corporation (Daisy) for all of its stock. Flower distributes all of the Daisy stock to its shareholders. Flower retains the Gerbera division and NOL without limitations on its use.
c. Using a split-up, Flower transfers the Daisy division assets to the new corporation (Daisy) for all of its stock and transfers the Gerbera division assets to the new corporation (Gerbera) for all of its stock. Flower distributes all of the Daisy and Gerbera stock to its shareholders in exchange for 100% of their Flower stock, and Flower then terminates. The Daisy division retains the NOL without limitations on its use.
d. Using a split-off, Flower transfers the Gerbera division assets to the new corporation (Gerbera) for all of its stock. Flower distributes all of the Gerbera stock to its shareholders in exchange for 52% of their Flower stock. Flower retains the Daisy division and NOL without limitations on its use.