PROBLEMS 1. Brother and Sister Corporation are owned by the same shareholders in the same proportionate amounts. The shareholders have a $200,000 basis in their Brother stock and Brother Corporation has operating assets with a value of $500,000 and basis of $150,000 as well as $200,000 of cash and $250,000 of earnings and profits. Sister Corporation, which has $300,000 of earnings and profits, purchases the operating assets for $500,000 cash and Brother Corporation immediately liquidates. (a) What are the consequences of these transactions to the shareholders and to both corporations? (b) Will the arguments of the taxpayers and the Service concerning the transactions differ from those advanced in the Smothers case? (c) Is there any simpler way for the taxpayers to achieve their objectives