Extra Credit Assignment 2.docx

Extra Credit Assignment 2.docx - Question Corporation S a...

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Question: Corporation S, a manufacturer of car tires, adopts a liquidation plan to sell all of its business assets. Corporation P, a luxury automaker and a 10% stockholder in Corporation S, has offered to buy all the assets of Corporation S. It has gradually bought 35% of Corporation S’s stock within the past eight (8) months and plans to purchase another 45% of voting shares within 30 days. The assets of Corporation S are: Tire Building Machines (FMV: 3,500,000; Basis: $3,650,000) Basis Tread Servicers (FMV: $1,200,000; Basis: $1,000,000) and Rubber Conversion Machines (FMV: $800,000; Basis: $550,000). All other equipment used was leased by Corporation S. a: Can Corporation P make a §338 election for this liquidation? If yes, why. If no, explain. b: Sixteen (16) months after Corporation S’s acquisition, Corporation P decides to reorganize its business. It exchanged a minority stake of its stocks solely in exchange for stock of a controlling stake in the voting rights of Corporation T. Corporation T supplies the metals for its cars. Briefly discuss.
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