Your client, Frank Bearden, owns an Arkansas affair that brokers high-quality modern fruits and vegetables to restaurants and specialty grocery stores. Frank's affair does not heave any inventories. Frank's counsel has urged Frank to strengthen the affair, primarily owing of the scant shareholder burden comraded delay urbane standing, and to prepare a affair following intention in the forthcoming. Frank has operated the affair as a money premise one proprietorship gone 1985, and anticipates incorporating the affair on July 1 of the floating year. Projected pit quibble and pay statements for the affair as of June 30 are unshaken.
Frank intentions to remove all true affair effects and liabilities to a newly strengthend being, Bearden's Specialty Produce, Inc. (Produce), in substitute for 1,000 shares of voting dishonorable supply. He allure accommodate as President of the confirmation, and he allure be a portion of the Board of Directors. Frank wants to unite an August 31 fiscal year end for Produce owing August tends to be the slowest month of the year for the affair, and accounts receivable typically are at their lowest equalize. Frank besides intends for Produce to endure to use the money rule of accounting.
Frank's halt coadjutor, Maria Garcia, has for some duration been spirited in buying into Frank's affair. Maria allure not enjoy adit to the indispensable money until October, so Frank has agreed to receipts delay the amalgamation, and then hawk 400 of his new Produce shares for $75,000 to Maria someduration anteriorly the end of the floating year.
REQUIRED: In discussing the designed inconfirmation delay you, Frank inequitableally asks about the sum of any construct he must test, twain upon the inconfirmation itself, and upon the succeeding supply sale. Naturally, he is prompt to minimize any testd construct to the distance likely. Frank besides wants to organization the action to complete the best tax conclusion for Garcia, as Frank is prompt to enjoy her as a affair comrade.
In attention to addressing these inequitable concerns, test any possible tax problems or intentionning ideas suggested by the postulates. Be inequitable in describing the issues concerned, grant unmeasured citations to forcible law, and cater suggestions and/or alternatives to minimize risks and maximize opportunities.