Tax research memo assignment

| January 30, 2017

Question
Panther Corporation

Ally, Bettina and Carly are sisters and each own 100 shares of 300 shares
outstanding of Panther Corporation. They have enjoyed running the business
together for several years and have been successful. Ally is getting married and
moving to California. She feels she can no longer be involved in the business and
wants to sell her stock, which has a basis of $40,000 and a FMV of $100,000. Either
Bettina and/or Carly can purchase Ally’s shares or Panther can redeem all of them.
Panther has a $220,000 E & P balance.

Required: Prepare a memorandum for your manager comparing the tax
consequences of the two options. Be sure to use only primary authority to reference
all your conclusions.

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