60. Jakub and Sylvia propose to have their corporation, Wolverine Universal (WU), acquireanother corporation, EMU Inc., in a tax-deferred triangular merger using an acquisitionsubsidiary of WU. The sole shareholder of EMU, Edie Eagle, will receive $250,000 plus $150,000of WU voting stock in the transaction.a) Can the transaction be structured as a forward triangular merger? Explain why or why not.b) Can the transaction be structured as a reverse triangular merger? Explain why or why not.

The objective of the question is to determine whether the proposed acquisition of EMU Inc. by…

Answered: 60. Jakub and Sylvia propose to have…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 32P

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JH Inc. has the assets with FMV of $100M and liabilities of $10M. Sunny plans to acquire JH’s assets but want to be a tax-deferred transaction. If the state merger statute does not allow this, how can she accomplish the acquisition? Briefly describe.
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Rondo and his business associate, Larry, are considering forming a business entity called R&L, but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership. Rondo and Larry would each invest $150,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $150,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $50,000 from the bank. If applicable, this debt will be shared equally between the two owners. a. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as a C corporation? b. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as an S corporation? c. After taking the loan into account, what is Rondo's tax basis in his R&L ownership interest if R&L is formed as an LLC and taxed as a partnership?

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