Question - PeekCo enters into a transaction to acquire Poodle, Inc., by exchanging $1.5 million of its voting stock for all remaining common ($900,000) and preferred stock ($600,000) outstanding. PeekCo currently owns 30% of Poodle that it bought three years ago for $250,000 from one of the original owners (basis of $50,000). The owner sold when she found out that PeekCo might have intentions of acquiring Poodle. Identify the tax issues in the proposed transaction.