Jones Investment

Memorandum

From: ___ TRUSTAS CPAs LLP______
To: ____Mr. Jones___________
Date: ___December 7, 2011 ________

Subject: Sale of Smithon Manufacturing Concerns
Per your inquiries, I have hustling responses to address them accordingly on a lower floor:
(1) Mr. Jones, your concerns are addressed below:
a) You asked if it is better to buy the stocks of Smithon or to issue debt in Johnson operate to buy Smithon, and my response is this:
Purchasing Smithon outright may booster in two folds for you; first, it is the simplest transaction, 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 also inherit the contractual obligations of the selling corporation as well as the implied responsibility of providing more direct infix to the management team for 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 have 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 current rank of Johnson shares, and that in turn may cause current 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 not greatly impact your companys value to shareholders. From a tax perspective under the 1984 tax law and IRS Code surgical incision 351 no gain or loss will be recognized for property transfers
b) I also understood your concerns regarding the scuttle of changing Smithons current C Corporation military position to S Corporation, and...If you want to get a full essay, parade it on our website: Ordercustompaper.com



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