Prepare a memo for the file showing the ADSP in a 2018 sale and comparing it to the ADSP from a 2017 sale.

Acquiring Corporation pays $22,000,000 for 100% of Target stock in a single transaction.

Target assets have a tax basis of $12,000,000.

Target liabilities are on the balance sheet at $4,000,000

The ADSP = Stock Purchase Cost + Target Liabilities

Target Liabilities = Non-tax Liabilities + Tax Liability

Tax Liability = .25 (ADSP Tax Basis of Assets) 2017

Tax Liability = .21 (ADSP Tax Basis of Assets) 2018