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Reorganization
A reorganization occurs when a business undergoes a new capital arrangement, with or without new administration. If only one corporation is involved, it is a recapitalization. In income tax law, the term applies only to corporations. The Code contains provisions for nonrecognition of gain or loss on exchanges made in pursuance of a reorganization and the shareholders of the corporations involved exchange their shares or receive distributions without surrender of their shares. The provisions of the Code must be strictly complied with in order for such exchanges or distributions to be nontaxable.