Outright Purchase

1. Outright purchase of smith stock
a) Yes, Mr. Jones should purchase the stock of smith outright, leaving Smithon intact as purchasing the stock of Smith co. is the simple and reasonable transaction where he do- nonhing as well minimize the cost of administrative matters. While issuing debt in his Johnson Services Co. to pay for the Smith Company there can arise debt issue for Johnson co if the cash flow of the play along is insufficient in making such purchase to taint Smith co stock.
b) Converting C corp to S corp has taxation benefit as C corp faces two-fold taxation. here(predicate), converting Smithon to S corp can give an advantage of having a control of limited or small number of shareholders.
Here in Smithon co. converting the calendar year increase the administrative expenses firearm preparing a short-year tax return from Dec. to Jan with the minimum effectiveness of its change.
c) Mr. Jones volition have elimination of double taxation associated with C corp and will be personally taxes in income gained from Smithons. As Mr. Jones falls under top tax bracket he cannot honor the advantage of S corp which tends to favor small line of credit and tax payers with little income.




d) Here, for processing the merger, study should be kill to show the profitability, elimination of costs in doing business so that merger is not limited to its physical appearance and consummation as separate entity. Furthermore, in choosing the type of merger and erudition that fits the best cannot be assumed as the case presented does not specify the business type and does not provide comme il faut information. Here, IRC sec 368 discuss about reorganization as:
(A) a statutory merger or consolidation;
(B) the acquisition by one corporation, in rallying solely for all or a part of its take stock (or in exchange solely for all or a part of the voting stock of a corporation which is in control of the getting corporation), of stock of another corporation if, immediately after the acquisition, the acquiring corporation...If you want to get a full essay, order it on our website: Orderessay



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