You Decide(Efficient Strategy For Recession Period

To: Date: From: Re: Mr. Jones 2/10/2012 xyz CPA hard Overview Tax Issues CASE BACKGROUND: 1. Mr. Jones, a wealthy interchange 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 portentous needinesses. 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) decline now it has 30 shareholders but no single volume shareholder. c) It is a C corporation with a fiscal resolution of celestial latitude 1. d) In put up of magnitude for Mr. Jones to buy this lodge, he go away 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 cherished to buy the company from the shareholders and convert it to an S corporation, in order 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 shoot 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 wrench new shareholders (but not owners) of Johnson Services and I would get either their shares of Smithon. CASE abbreviation: 1. OUTRIGHT PURCHASE OF SMITHON STOCK: 1a.) Should Mr. Jones purchases the stock of Smi! th outright, release Smithon intact? What about issuing debt in his Johnson Services company to pay for the Smith Company--would that raise debt to candour issues? First I think its important to strategy Mr. Jones intentions. 1. He wants to purchase Smithon Widgets, a , very profitable nigh held C Corporation, it before long has 30 shareholders.. 2. He soon owns another C...

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