LO.3 Beach Corporation, a service business, is owned by 50 unrelated shareholders. It just lost a $1.5 million product liability lawsuit. Its assets currently have a value of $6 million, and its outstanding liabilities, including the payables from the lawsuit, total $4.6 million. As a result of the lawsuit, Beach’s future revenue stream appears to be substantially impaired.

Beach’s president, Sandy Shores, asks your advice regarding the possibility of:

• Restructuring Beach from a C corporation to an S corporation so that the losses will flow through to the owners.

• Renaming the corporation Ocean.

• Moving to a state that has a coastline and that recognizes S status.

Write a letter to Sandy explaining her choices in restructuring Beach. Beach’s address is 9180 Laurel Street, Florence, OR 97439.