Luis owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Luis founded Silver
12 years ago. The assets and liabilities of Silver are recorded as follows. $\begin{array}{lcc}
\text { Assets } & \text { Basis } & \text { FMV } \
\text { Cash } & \$ 15,000 & \$ 15,000
\end{array}$ *Accumulated depreciation of $55,000 has been deducted.
Luis 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.
a. Advise Luis 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

Luis owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Luis founded Silver
12 years ago. The assets and liabilities of Silver are recorded as follows. $\begin{array}{lcc}
\text { Assets } & \text { Basis } & \text { FMV } \
\text { Cash } & \$ 15,000 & \$ 15,000
\end{array}$  *Accumulated depreciation of $55,000 has been deducted.
Luis 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. 
a. Advise Luis 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 Luis owns all the stock of Silver, Inc., a C corporation for which his adjusted basis is $225,000. Luis founded Silver
12 years ago. The assets and liabilities of Silver are recorded as follows. $\begin{array}{lcc}
\text { Assets } & \text { Basis } & \text { FMV } \
\text { Cash } & \$ 15,000 & \$ 15,000
\end{array}$  *Accumulated depreciation of $55,000 has been deducted.
Luis 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. 
a. Advise Luis 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.

Luis Owns All the Stock of Silver, Inc Assets Basis FMV Cash $15,000$15,000\begin{array}{lcc}\text { Assets } & \text { Basis } & \text { FMV } \\\text { Cash } & \$ 15,000 & \$ 15,000\end{array} Assets Cash ​ Basis $15,000​ FMV $15,000​

Luis Owns All the Stock of Silver, Inc $\begin{array}{lcc}\text { Assets } & \text { Basis } & \text { FMV } \\\text { Cash } & \$ 15,000 & \$ 15,000\end{array}$