This benchmark assignment assesses the following competency: 3.1: Demonstrate knowledge and understanding of concepts and laws relating to federal taxation.

In an exchange qualifying for Sec. 351 tax free treatment, Greta receives 100 shares of White Corporation stock plus a right to receive another 25 shares. The right is contingent on the valuation of a patent contributed by Greta. Because the patent license is pending, the patent cannot be valued for several months. Prepare a memorandum for your tax manager explaining whether the underlying 25 shares are considered stock for purposes of Sec. 351 and what tax consequences ensue from Gretas receipt of the 100 shares now and 25 shares later upon exercise of the right.

Using a memo format, prepare a professional response to the Tax Research Problem above.

1. Appropriate header Taxpayers name and date of meeting, which should be the assignment submission date.
2. Facts about the case study, including a summary of current developments (i.e., issues).
3. An analysis of the case scenario, including the applicable federal taxation implications of the concepts and laws related to the issue(s).
4. Description of recommendations to the client on the consequences of the transaction.
5. The memo should be between 1,000-1,500 words with the following sections presented in the following order: Facts, Issue(s), Conclusion, and Discussion.