Please answer these questions and explain your answer.

Q1- JH Inc is a French holding company that owns a wholly owned subsidiary formed in the US, Sunny Inc. All the management including CEO, COO, and CFO are residing and working at JH Inc. where some of their times are dedicated to managing Sunny Inc. Assuming that JH Inc fully deducts all the executive/management compensations, what potential tax issue may arise for US and/or French income tax purposes and based on what tax provision or authority or how to mitigate the issues?

Q2- Specifically explain why a failure to identify hedging transactions could result in unfavorable tax consequences to the taxpayer.

Q3- Joe owns 45% of JH Inc. Joe sells property JH Inc for $600. The property has an adjusted basis of $900 at the time of sale. JH Inc later sells the property for $1,100 to an unrelated party. Provide federal income tax consequence(s).

Q4- Earnout is treated as either ___________ or _________ adjustment.