PROBLEM Father is the sole shareholder of an incorporated department store which he has owned for 45 years. He has a basis of $2 million in his Store Corporation stock, which is currently worth $20 million. Store has $4 million of accumulated earnings and profits. Three years ago, Store acquired land in Suburb, where it constructed and then opened a new branch store. The branch has been quite successful and represents $5 million of the $20 million net worth of Store Corporation. The assets of the branch have a $1 million basis. Father recently celebrated his 75th birthday and is exploring some estate planning alternatives. His attorney has suggested that he should have Store Corporation transfer the Suburb store to newly created Branch Corporation in exchange for Branch stock worth $4 million and Branch securities worth $1 million. Store Corporation, which would be worth $15 million after this transaction, then would distribute the Branch stock and securities to Father who in turn would give the Branch stock to his children. Discuss all the income tax consequences of the above transactions to Father, Store Corporation and Branch Corporation, assuming first that the corporate division totally or partially qualifies under Section 355 and then that it fails to qualify PROBLEM Father is the sole shareholder of an incorporated department store which he has owned for 45 years. He has a basis of $2 million in his Store Corporation stock, which is currently worth $20 million. Store has $4 million of accumulated earnings and profits. Three years ago, Store acquired land in Suburb, where it constructed and then opened a new branch store. The branch has been quite successful and represents $5 million of the $20 million net worth of Store Corporation. The assets of the branch have a $1 million basis. Father recently celebrated his 75th birthday and is exploring some estate planning alternatives. His attorney has suggested that he should have Store Corporation transfer the Suburb store to newly created Branch Corporation in exchange for Branch stock worth $4 million and Branch securities worth $1 million. Store Corporation, which would be worth $15 million after this transaction, then would distribute the Branch stock and securities to Father who in turn would give the Branch stock to his children. Discuss all the income tax consequences of the above transactions to Father, Store Corporation and Branch Corporation, assuming first that the corporate division totally or partially qualifies under Section 355 and then that it fails to qualify