Tin Corporation was created 10 years ago. It currently is valued at $1.5 million as follows: Tacks division $420,000), Safety Pins division $580,000), Paper Clips division $450,000), and investment assets $50,000). Tin currently has three shareholders: Antonio, who was the initial shareholder and now owns 40% of the stock basis in stock
$350,000), and Beth and Chang, each of whom purchased 30% of Tin two years ago for $435,000.
Tin is having management problems because the shareholders cannot agree on the future of the company. They have determined that it would be best to divide up the company and go their separate ways. Each shareholder feels that the others do not deserve to continue using the Tin Corporation name.

a. Determine what would be the best method to divide the corporation among the shareholders with the least amount of taxes.
b. Draw a diagram of the solution you suggested in part
c. Any investments that should be received by the new entities will be distributed to the shareholders in exchange for their Tin stock. Beth is the only shareholder who has indicated that she prefers to receive some investments. Determine the gain or loss each entity and shareholder will have upon the division.

Question

Tin Corporation was created 10 years ago. It currently is valued at $1.5 million as follows: Tacks division $420,000), Safety Pins division $580,000), Paper Clips division $450,000), and investment assets $50,000). Tin currently has three shareholders: Antonio, who was the initial shareholder and now owns 40% of the stock basis in stock
$350,000), and Beth and Chang, each of whom purchased 30% of Tin two years ago for $435,000.
Tin is having management problems because the shareholders cannot agree on the future of the company. They have determined that it would be best to divide up the company and go their separate ways. Each shareholder feels that the others do not deserve to continue using the Tin Corporation name.

a. Determine what would be the best method to divide the corporation among the shareholders with the least amount of taxes.
b. Draw a diagram of the solution you suggested in part
c. Any investments that should be received by the new entities will be distributed to the shareholders in exchange for their Tin stock. Beth is the only shareholder who has indicated that she prefers to receive some investments. Determine the gain or loss each entity and shareholder will have upon the division.

Quizplus · Accepted Answer

The Answer of Tin Corporation was created 10 years ago. It currently is valued at $1.5 million as follows: Tacks division $420,000), Safety Pins division $580,000), Paper Clips division $450,000), and investment assets $50,000). Tin currently has three shareholders: Antonio, who was the initial shareholder and now owns 40% of the stock basis in stock
$350,000), and Beth and Chang, each of whom purchased 30% of Tin two years ago for $435,000.
Tin is having management problems because the shareholders cannot agree on the future of the company. They have determined that it would be best to divide up the company and go their separate ways. Each shareholder feels that the others do not deserve to continue using the Tin Corporation name.

a. Determine what would be the best method to divide the corporation among the shareholders with the least amount of taxes.
b. Draw a diagram of the solution you suggested in part
c. Any investments that should be received by the new entities will be distributed to the shareholders in exchange for their Tin stock. Beth is the only shareholder who has indicated that she prefers to receive some investments. Determine the gain or loss each entity and shareholder will have upon the division.

Tin Corporation Was Created 10 Years Ago