1. Joe has received an offer to sell his company to
Microsoft Inc. for $40 million. The selling price will consist of 20% cash and
the balance in Microsoft stock. Joe asks your advice on the different tax
structure possibilities for the sale of the company and your recommendation for
which method he should consider?
2. a) Mary and Peter formed a new corporation MP, INC on
February 8, 2010 and did not elect Subchapter S. On December 20, 2010, they
come to you and ask if an S corporation makes sense for them. MP Inc, earned
$100,000 during 2010. Discuss the tax implication of making the S election for
b) If MP, Inc loses $100 in 2010; would your answer be
3. One June 1, 2010, John sold his stock in LIU,Inc. to
Apple, Inc for $5 Million. When the stock was sold, LIU had an unused net
operating loss carry forward of $1,375,000. To what extent can Apple use the
operating loss carry forward of LIU? (The long- term tax exempt interest rate
4. Leslie is an employee of Granger, Inc. a public company.
During 2010, Leslie received qualified employee stock options to purchase the
stock of Granger for $1 per share. On December 8, 2010 Leslie exercise her
right to acquire 10,000 shares of Granger for $1. On this date, the fair market
value of Granger was $5 per share. Discuss the tax consequences to Leslie at
the grant date and exercise date.