Here is the synopsis of our sample research paper on Finance and Accounting Problems. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
4 pages addresses 2 accounting and finance problems. The first involves Banbury Corporation’s acquisition of Luttrell Co., which owned residential investment property that Banbury did not want. The second discusses Ms. Sack’s investment in Dylan, consisting of $20,000 cash and $20,000 (FMV, basis $2,000), concluding that half of the capital gains on the sale of her interest in the company are short-term, half long-term. Bibliography lists 3 sources.
Page Count:
4 pages (~225 words per page)
File: CC6_KSacctProbMrgr.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
Banbury Corporation is acquiring Luttrell Inc. in a type C reorganization, which by definition is "an acquisition of assets in exchange for stock" (Duva, 1991). Luttrell owns residential
rental property that Banbury does not want, so Banbury will "issue voting stock in exchange for Luttrells business assets and immediately after this exchange, Luttrell will liquidate by distributing the
stock and rental property to its shareholders," increasing "shareholders aggregate basis in their stock by $2 million." Revenue Ruling 2001-46 liberalized mergers of
small companies (Trelease, Meehan and Storum, 2002); it applies to the disposition of unwanted assets. Luttrell should have spun off the residential property, making it an entity separate from
the remainder of Luttrells business. This - and the handling of that entity after the merger - could have placed the merger into tax deferment. At worst, it
would have triggered corporate-level tax only (Trelease, Meehan and Storum, 2002). Banbury would not have had to acquire all of Luttrells assets as historically has been the case in
Type C reorganizations. The merger then would have been subject to "the continuity of business enterprise (COBE) test, [which] requires continuation of a
substantial portion of the target companys business" (Trelease, Meehan and Storum, 2002; p. 23). The case does not state what portion of Luttrells business was attributable to the rental
property that Banbury does not want, but without a pre-merger spinoff of the rental property, that information would have been superfluous. Because there
was no pre- or post-merger spinoff of the rental property, the entire process will be subject not only to corporate tax, but shareholders likely will be taxed as well.
...