Solution-What are the tax consequences of the transaction

What are the tax consequences of the transaction to frank

Reference no: EM132716892

Question: Frank Manzano owns 60% of Manzano and Sons, Inc., a manufacturing company. His son, Frank Jr. owns the other 40%. Frank wants to retire and let Jr. take over so he sets up the following transaction: The corporation will redeem all of his stock for $3,000,000 and will file an affidavit with the IRS agreeing to have nothing to do with the operations of the business for 10 years. Note that he has a basis is his stock of $1.4 million.

However, there is a complication. He owns the building and land that the company works out of himself and receives lease payments of $120,000/year for the property. This would continue after he retires. These payments have been determined to be reasonable under IRS guidelines.

What are the tax consequences of this transaction (the redemption) to Frank?

Reference no: EM132716892

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What are the tax consequences of the transaction to frank : Frank Manzano owns 60% of Manzano and Sons, Inc., a manufacturing company. His son, Frank Jr. owns the other 40%. Frank wants to retire and let Jr. take.

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What are the tax consequences of the transaction to frank

Reference no: EM132716892

Reference no: EM132716892

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