Need help with an Tax Memo

Tax Memo GInstructions:
The memo should not exceed two pages. However, the answer should be a full 2 pages
(double spaced, times new roman 12pt., 1-inch margins) Do not repeat the question in the
answer. Each memo must include an explanation of the relevant code sections, regs and/or
other relevant controlling authority such as case law. Don’t just cite the rules or cases,
explain them and their application to the specific facts in the questions.
Questions:
Determine whether the following transactions incur Federal income tax in the current year,
applying the corporate reorganization rules. If a transaction is not taxable, indicate what type of
reorganization, if any.
1. Alpha Corporation owns assets valued at $400,000 and liabilities of $100,000. Beta
Corporation transfers $160,000 of its voting stock and $40,000 in cash for 75% of
Alpha’s assets and all of its liabilities. Alpha distributes its remaining assets and the Beta
stock to its shareholders. Alpha then liquidates.
2. Beta Corporation owns assets valued at $1,500,000 with liabilities of $700,000, and
Alpha holds assets valued at $350,000 with liabilities of $150,000. Beta transfers 200,000
shares of stock and $50,000 cash, and it accepts $100,000 of Alpha’s liabilities, in
exchange for all of the Alpha assets. Alpha distributes the Beta stock to its shareholders
for their Alpha stock and then ceases to exist.
3. Alpha Corporation obtained 200,000 shares of Beta Corporation’s stock 10 years ago. In
the current year, Alpha exchanges 40% of its stock for 500,000 of the remaining 600,000
shares of Beta stock. After the transaction, Alpha owns 700,000 of the 800,000 Beta
shares outstanding.
4. Alpha Corporation’s two divisions have existed for seven years. The nail division has
assets valued at $500,000 and liabilities of $120,000, whereas the hammer division has
assets valued at $645,000 and liabilities of $25,000. Alpha would like the two divisions to
be separate corporations. It creates Beta Corporation and transfers all of the hammer
division assets and liabilities in exchange for 100% of Beta’s stock. Alpha then distributes
the Beta stock to its shareholders.
5. Alpha Corporation owns assets valued at $750,000 with liabilities of $230,000, and Beta
holds assets valued at $1,500,000 with liabilities of $500,000. Beta transfers 33% of its
stock for $700,000 of Alpha’s assets and $200,000 of its liabilities. Alpha distributes the
Beta stock and its remaining assets and liabilities to its shareholders in exchange for their
stock in Alpha. Alpha then terminates.
Tax Research Memo
Sample Format
Your Firm
Your Town and State
Date
Relevant Facts
Specific Issues
Conclusions
Support