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21 June 2008 Tax Case Study

The promoters in this case , Sylvia Fairplay and Joseph Dealer , do not have to documents with the Securities and Exchange Commission (SEC by virtue of the exemption available to them under Regulation D of SEC Thus , it would prepare a Private Placement Memorandum (PPM , containing all the relevant information that is as a rule found in the SEC filing

The information that would be required

would be in terms of : Details of the business offer of the securities and income tax matters section

The matters that need to be included in this section are with regard to the modalities of the issue and the factors that govern the public issue with particular regard to risk factors , terms and conditions of the issue , and other matters . In certain respects , this statement can also serve as a prelude to the prospectus in affording relevant investor information . However , it needs to be cautioned that potential investors must ascertain facts and figures relating to the investments before indulging in speculative transactions . When offering securities to an investor , the HYPERLINK "http /wistechnology .com /articles /3799 issuer must not make any untrue statements of a material fact , or omit to state a material fact necessary in to make the statements made in the light of the circumstances under which they were made , not misleading (Storms , 2007 . Thus , it is seen that in this case the individual partners , Sylvia and Joseph , have relinquished their claims and liabilities on the partnerships and the properties and the liabilities of 570 ,000 have been taken over by newly formed LLC

Details of owned properties Mortgages ) Fair market value Location : 641Lincoln : 1200 Baseline : 231 , Broadway 90 ,000

180 ,000

300 ,000

210 ,000

240 ,000

420 ,000

570 ,000 870 ,000 The position that now emerges is that the are taken over by the LLC and the properties sold in to pay off the partners

Joseph 's adjusted share would be as follows

Property at 641 Lincoln

62 ,000

1200 Baseline

90 ,000

231 , Broadway

105 ,000 The new sharing ratio in the newly constituted LLC would be as follows

Sylvia 30

Joseph 30

Public offer 40

The other aspects in this case study could be seen in terms of the fact that in to attract potential investors for this public issue , it would be necessary for the company to offer them handsome inducements This could be in the form of realization of income tax losses sustainability of tax-free cash allocation , exemptions being awarded for Capital Gains Taxes (CGS ) and other losses and write-offs

It is seen that the members shall apportion the current distribution of cash or profits made by the LLC in the ratio of 3 :3 :4 , which is their sharing ratio . Members shall also share the distribution (s ) of cash and /or property upon liquidation of the LLC in the...