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To: Date: From: Re: Mr. Jones 2/10/2012 xyz CPA doting Overview Tax Issues CASE BACKGROUND: 1. Mr. Jones, a wealthy flip over node of the firm, has decided to lounge about a manufacturing familiarity, Smithon Widgets (a C jackpot) that has been very profitable. 2. This client, Mr. Jones, is the bulk shareholder of another C corporation, Johnson Services, which has incurred material disadvantagees. 3. Mr. Jones comes to you with some questions and suggested outcomes. a) I want to misdirect Smithon Manufacturing because it is very profitable. b) proper now it has 30 shareholders but no single legal age shareholder. c) It is a C corporation with a fiscal final stage of celestial latitude 1. d) In consecrate for Mr. Jones to buy this lodge, he entrust need to gift a lot of money in new manufacturing equipment, which meaning that Smithon will incur a loss for two years. e) Mr. Jones wants to buy the company effective January 1. f) Mr. Jones indicated that he tr easured to buy the company from the shareholders and convert it to an S corporation, in assure to offset Smithons profits with the losses from Johnson Services. g) Also, Mr. Jones wanted a fiscal year-end that is also a calendar year-end, i.e., December 31. h) We should consider whether I could issue shares of monetary fund from Johnson Services which is a C corporation to the shareholders of Smithon in an exchange of shares. That way, the current Smithon owners would go away new shareholders (but not owners) of Johnson Services and I would get totally their shares of Smithon. CASE abbreviation: 1. OUTRIGHT PURCHASE OF SMITHON STOCK: 1a.) Should Mr. Jones purchases the stock of Smith outright, release Smithon intact? What about issuing debt in his Johnson Services company to pay for the Smith Company--would that raise debt to legality issues? First I think its important to strategy Mr. Jones intentions. 1. He wants to purchase Smithon Widgets, a , very profitable close h eld C Corporation, it before long has 30 sh! areholders.. 2. He presently owns another C...If you want to get a full essay, order it on our website: BestEssayCheap.com

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