Tax Research ulallon 0 or sti Your response should be well arganized and neatly presented. Make sure your answer includes the following: I. Clearly identily your topic and whal it is you would like to learn provide a copy of the cade sectlon's) applicable to your question; indicate how you leaned which section applies 2. 3. 4. provde a copy of an explanalory regulation (which Includes an example of your s. provide a copy of a case which deals with your topic (NJ or Federal); problem) 6. provide a copy of a recent article which deals wilh your lopic (wilhin the last 10 7. explain which on-lins or other resources you used to locate each of the above years); and (code sectian, regulation, case and aricle), and provide infamalion on how you navigated lhrough these resources. Question Presented Shelly is the president and the sole shareholder of Kane Corporation, stock basis $400,000). Incorporated in 2005, Kane's sole business has consisted of purchase and resala of used medical equlpment In December 2015, Kane transfarred its entire inventory, basis of 1.2M to Shelly in a transaction described by the partles as a sale. According to Shelly and collaborated by the minutes of the board of directors, the inventory was sold to her for $2 mililion, Its fair market value. The terms of the sale provided that Shelly would pay Kane $2 million at soms future bt obligation was not evidenced by a promissory note and to date, date. The de Shelly has made no payments, principle or interest, on the obligation. The inventory transfer was not reported on Kane's 2015 tax return, either as a sale or a distrlbution. Afler the transfer of the Inventory to Shelly, Kane Corporation had no remalning assets and ceased to conduct any business. Kane did not formally liquidate under state law. IRS audited Kane's 2015 tax return and 1. Transfer of invantory constitutad taxable liquidation distribution In the IRS asserted entire tax liability of $800,000 agalnst Shelly based on assessed the following: amount of $800,000 (2M-1.2M) 2. transferee liability IRS assessed tax due from Shelly for her gain recognized in the purported liquidating distribution 3. Shelly contacted you regarding IRS's determination. Prepare a memo documenting your research. What are the tax consequences to Kane? To Shelly? Tax Research ulallon 0 or sti Your response should be well arganized and neatly presented. Make sure your answer includes the following: I. Clearly identily your topic and whal it is you would like to learn provide a copy of the cade sectlon's) applicable to your question; indicate how you leaned which section applies 2. 3. 4. provde a copy of an explanalory regulation (which Includes an example of your s. provide a copy of a case which deals with your topic (NJ or Federal); problem) 6. provide a copy of a recent article which deals wilh your lopic (wilhin the last 10 7. explain which on-lins or other resources you used to locate each of the above years); and (code sectian, regulation, case and aricle), and provide infamalion on how you navigated lhrough these resources. Question Presented Shelly is the president and the sole shareholder of Kane Corporation, stock basis $400,000). Incorporated in 2005, Kane's sole business has consisted of purchase and resala of used medical equlpment In December 2015, Kane transfarred its entire inventory, basis of 1.2M to Shelly in a transaction described by the partles as a sale. According to Shelly and collaborated by the minutes of the board of directors, the inventory was sold to her for $2 mililion, Its fair market value. The terms of the sale provided that Shelly would pay Kane $2 million at soms future bt obligation was not evidenced by a promissory note and to date, date. The de Shelly has made no payments, principle or interest, on the obligation. The inventory transfer was not reported on Kane's 2015 tax return, either as a sale or a distrlbution. Afler the transfer of the Inventory to Shelly, Kane Corporation had no remalning assets and ceased to conduct any business. Kane did not formally liquidate under state law. IRS audited Kane's 2015 tax return and 1. Transfer of invantory constitutad taxable liquidation distribution In the IRS asserted entire tax liability of $800,000 agalnst Shelly based on assessed the following: amount of $800,000 (2M-1.2M) 2. transferee liability IRS assessed tax due from Shelly for her gain recognized in the purported liquidating distribution 3. Shelly contacted you regarding IRS's determination. Prepare a memo documenting your research. What are the tax consequences to Kane? To Shelly
