GTE's Offer:

1.     What were the terms of GTE's offer for MCI?

2.     What would the tax implications of this acquisition be for MCI's shareholders?

3.     What type (tax type) of merger is this, based on your best guess (see merger documents that are attached)?

4.     What were the tax implications of this merger structure for GTE?

·       What gross tax basis in MCI's assets (in dollars) would GTE take (approximately)? Assume that all of MCI's deferred taxes relate to timing differences between book and tax depreciation (use the deferred tax data from the balance sheet, not the footnotes). Compute the basis as of June 30, 1997. (Use MCI's June 30, 1997 balance sheet and MCI's 12/31/97 income statement and footnotes as the basis for your computations.)

·       What net tax basis in MCI's assets would GTE take?

·       What tax basis in MCI stock (in dollars) would GTE take (approximately)? [you can collect information on MCI's stock price across time (from before the acquisition) from the Standard and Poor's Stock Price Guide among other sources. If necessary, make some reasonable assumption about MCI's stock basis.]?