STRAYER ACC565 Week 3 AND WEEK 4 DISCUSSIONS

WEEK 3
“Preferred Stock Bailouts and Personal Holding Company” Please respond to the following:
From your analysis of Section 306 in the e-Activity, differentiate
between the tax treatment of earnings and profit on the distributing
corporation of both a sale of Section 306 stock and redemption of
Section 306 stock. Suggest the most important reasons for this
differentiation in tax treatment.Per the text, the personal holding company (PHC) tax penalizes
taxpayers who enter into tax-motivated transactions designed to shelter
passive income of closely held corporations from higher individual tax
rates. Suppose you represent a professional athlete who is the majority
owner of a corporation. The corporation has several personal service
contracts with advertising agencies and endorsements for your client in
addition to passive income. Propose a plan in which you eliminate the
potential for the PHC tax on the client’s corporation.
WEEK 4
“Corporate Liquidations, Taxable Acquisition Transactions, and Nontaxable Reorganizations” Please respond to the following:
From the e-Activity, evaluate the appropriateness of the techniques
used and the common issues pursued by the IRS in corporate liquidations
and dissolutions. Create an argument to defend the client if the IRS
pursues the assignment of income doctrine or the clear reflection of
income doctrine on a cash-basis corporation, as reflected in the
Examining Officers Guide (EOG).IRC Section 338 allows a deemed sale election generating immediate
taxation to the target corporation and a stepped-up or stepped-down
basis to the price paid by the acquiring corporation for the target
corporation stock plus liabilities on the deemed sale. Examine at least
one (1) benefit of a Section IRC 338 liquidation election for a target
corporation. Create a situation which demonstrates a favorable IRC
Section 338 liquidation election for a target corporation.