The Rho Corporation was incorporated eight years ago by Tyee and Danette. Tyee received 6,800 shares of
Question:
The Rho Corporation was incorporated eight years ago by Tyee and Danette. Tyee received 6,800 shares of common stock for his $136,000 contribution, and Danette received 13,600 shares of common stock for her $272,000 contribution. Five years ago, both Tyee and Danette acquired $68,000 of Rho bonds paying 3% interest.
In the current year, Rho's common stock is valued at $1,224,000. SheenCo would like to acquire a 25% interest in Rho by purchasing common stock from Rho. Tyee and Danette see this as a good time to restructure Rho's capital. They would like to own bonds paying 5% interest, instead of 3%, and each would like to receive $300,000 of preferred stock (par of $100 per share) in exchange for some of their common stock.
South Western Federal Taxation 2016 Corporations Partnerships Estates And Trusts
ISBN: 9781305399884
39th Edition
Authors: James Boyd, William Hoffman, Raabe, David Maloney, Young