Ralph owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Ralph founded Silver 12 years ago. The assets and liabilities of Silver are as follows:
*Accumulated depreciation of $55,000 has been deducted.
Ralph has agreed to sell the business to Marilyn and they have agreed on a purchase price of $350,000 less any outstanding liabilities. They are both in the 35% tax bracket, and Silver is in the 34% tax bracket.
a. Advise Ralph on whether the form of the sales transaction should be a stock sale or an asset sale.
b. Advise Marilyn on whether the form of the purchase transaction should be a stock purchases or an asset purchase.

Question

Ralph owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Ralph founded Silver 12 years ago. The assets and liabilities of Silver are as follows:
   *Accumulated depreciation of $55,000 has been deducted.
Ralph has agreed to sell the business to Marilyn and they have agreed on a purchase price of $350,000 less any outstanding liabilities. They are both in the 35% tax bracket, and Silver is in the 34% tax bracket. 
a. Advise Ralph on whether the form of the sales transaction should be a stock sale or an asset sale.
b. Advise Marilyn on whether the form of the purchase transaction should be a stock purchases or an asset purchase.

Quizplus · Accepted Answer

The Answer of Ralph owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Ralph founded Silver 12 years ago. The assets and liabilities of Silver are as follows:
   *Accumulated depreciation of $55,000 has been deducted.
Ralph has agreed to sell the business to Marilyn and they have agreed on a purchase price of $350,000 less any outstanding liabilities. They are both in the 35% tax bracket, and Silver is in the 34% tax bracket. 
a. Advise Ralph on whether the form of the sales transaction should be a stock sale or an asset sale.
b. Advise Marilyn on whether the form of the purchase transaction should be a stock purchases or an asset purchase.

Ralph Owns All the Stock of Silver, Inc