17 Oct A owns 60 of the100 outstanding X shares, with a $600 adjusted basis. B owns the other 40shares. If A wants to sell a few
(1) A owns 60 of the100 outstanding X shares, with a $600 adjusted basis. B owns the other 40shares. If A wants to sell a few shares and avoid distribution treatment, willA want to sell to B or to X? How will B feel about As choice? Will As and Bsconcerns change if X is an S corporation with no E&P account?
(2) A owns 60 shares($10 per share basis) and B owns 40 shares ($30 per share basis) of X,representing all of Xs outstanding shares. A and B are unrelated unlessotherwise stated. X has $500 E&P. What are the results to A, B, and X fromthe following alternative transactions?
(a) A sells all ofAs X stock to B for $200 in cash and $1,000 in notes payable over a 10-yearperiod.
(b) X redeems (butdoes not cancel) all of As stock on the same terms as (a) above. Is this anLBO? What if A stayed on an Xs president with compensation tied to Xsprofits? What if A were a corporate raider?
(c) Suppose in (a)and (b) above that As sock is sold or redeemed at fair market value for $200cash plus an $800 note (face and FMV), rather than a $1,000 note. A is Bsfather. After the sale, A moves to Florida and has no connection with Xwhatsoever. Alternatively, what if A stays in town and consults with X,maintaining the same office at X and receiving $2,000 per month plus medicaland life insurance benefits? What if B hates A, and the feeling isreciprocated? A owns 60 shares ($10 per share basis) and B owns 40 shares ($30per share basis) of X, representing all of Xs outstanding shares. A and B areunrelated unless otherwise stated. X has $500 E&P.
(d) Suppose in (a)above the X pays off Bs note as payments fall due. Is this a smart way to doan LBO? What if B is a corporation that recently acquired its X stock?
(e) Suppose in (b)above that B had the option to buy As X stock at $20 per share, but insteadallowed X to make the purchase.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Wridemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.