Instructions:

Your answers should be phrased in the form of a question. Do not answer the questions. A complete submission should include at least four questions in total.

Note that the questions you pose should be question that can only be answered by conducting tax research such as reviewing the tax code or case law. It should not be a question of fact that can be answered by asking the client or reviewing the transaction documents.

Identify Tax Issues

Information:

Identify at least two main tax issues suggested for each of the scenarios described below:

Peter Jones has owned all 100 shares of Trenton Corporation stock for the past five years. This year, Mary Smith contributes property with a $50,000 basis and an $80,000 FMV for 80 newly issued Trenton shares. At the same time, Peter contributes $15,000 in cash for 15 newly issued Trenton shares. What tax issues regarding the exchanges should Mary and Peter consider?

Aloha Inc. sells timeshares in Hawaii. Gerry bought a timeshare from Aloha Inc,. He agrees to pay $10,000 down and Aloha Inc. will finance a seven year note for the balance of the purchase price at the current market rate of interest. Identify the issues for Aloha Inc.