Zarco, a very profitable corporation, was owned by Julio, Tilly, and Martinez. Julio and Martinez purchased all

Question:

Zarco, a very profitable corporation, was owned by Julio, Tilly, and Martinez. Julio and Martinez purchased all of Tilly’s Zarco Corporation stock for $ 50,000 and a $ 100,000 promissory demand note guaranteed by Zarco. Tilly demanded payment on the note, and Zarco, rather than Julio and Martinez, paid the note. What are the tax consequences of this transaction?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...