Alice, Betty and Carol are equal owners of ABC, Inc. They believe that ABC is worth about $3,000,000 today. They think that the value of ABC will increase by about 5% to 10% per year. Each of them has a basis in their stock of $500,000. ABC is very profitable. Each of them draw an annual salary of $250,000. They agree that if any one of them dies, they do not want anyone else to be the owner of the decedent’s stock. Explain which method you recommend they use and why. ( a stock redemption buy-sell agreement or a cross-purchase buy-sell agreement )
Alice, Betty and Carol are equal owners of ABC, Inc. They believe that ABC is worth about $3,000,000 today. They think that the value of ABC will increase by about 5% to 10% per year. Each of them has a basis in their stock of $500,000. ABC is very profitable. Each of them draw an annual salary of $250,000. They agree that if any one of them dies, they do not want anyone else to be the owner of the decedent’s stock. Explain which method you recommend they use and why. ( a stock redemption buy-sell agreement or a cross-purchase buy-sell agreement )
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 14DQ
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Alice, Betty and Carol are equal owners of ABC, Inc. They believe that ABC is worth about $3,000,000 today. They think that the value of ABC will increase by about 5% to 10% per year. Each of them has a basis in their stock of $500,000. ABC is very profitable. Each of them draw an annual salary of $250,000. They agree that if any one of them dies, they do not want anyone else to be the owner of the decedent’s stock.
Explain which method you recommend they use and why. ( a stock redemption buy-sell agreement or a cross-purchase buy-sell agreement )
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT