Answer:
From my research, this particular problem appears to be based on Section 368 and more specifically Revenue Ruling 98-10. The reason I say this is because here is the issue and facts from the IRS website:
Rev. Rul. 98-10
ISSUE
Where a stock for stock acquisition otherwise qualifying under § 368(a)(1)(B) of the Internal Revenue Code is accompanied by an exchange of securities, how should the transaction be treated?
FACTS
The facts are substantially similar to the facts in Rev.
Rul. 69-142, 1969-1 C.B. 107.
Corporation X acquires all of the outstanding capital stock of Corporation Y in exchange for voting stock of X. Corporation Y is a solvent corporation. Prior to the exchange, Y has an issue of six percent fifteen-year debentures outstanding. Pursuant to the plan of reorganization, X