Jones Investment

Memorandum From: ___ TRUSTAS CPAs LLP______ To: ____Mr. Jones___________ Date: ___December 7, 2011 ________ Subject: Sale of Smithon Manufacturing Concerns Per your inquiries, I lead hustling responses to address them accordingly on a lower chronicle: (1) Mr. Jones, your concerns argon addressed below: a) You asked if it is better to buy the painss of Smithon or to issue debt in Johnson operate to buy Smithon, and my response is this: buying Smithon outright may booster in two folds for you; first, it is the simplest accomplishment, and probably the least costly in terms of administrative matters. On the other hand, if you purchase it outright, you must(prenominal) the assets, liabilities and alike inherit the contractual obligations of the marketing corporation as well as the implied responsibility of providing more(prenominal) direct infix to the management team for sidereal day to day operations. From a valuate perspective a straight cash-for-stock purchase will lonesome(prenominal) incur tax income liabilities on any capital gains that resultant role from either the trade of appreciated stock or dividends. Regarding the thought that you are considering raising capital by issuing new shares for Johnson stock to acquire Smithton, I make up this response for you: Unless Johnson has fitted supply of capital stock shares to cover most of the purchase the issuance of new shares would greatly impact the menstruum rank of Johnson shares, and that in turn may cause underway investors to sale off their shares thereby reducing the companys functional capital. As stated previously though, if there are competent shares of capital stock available to cover the transaction and so this would be a viable option that would non greatly impact your companys value to shareholders. From a tax perspective under the 1984 tax law and IRS canon surgical incision 351 no gain or redness will be recognized for proper ty transfers b) I also understood your conc! erns regarding the scuttle of changing Smithons current C Corporation military position to S Corporation, and...If you want to cop a full essay, parade it on our website: OrderEssay.net

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