Ms. Uusiku posts a letter to TBA (Pty) Ltd with an offer to buy 1000 shares in the company. The directors agreed, and a letter informing her that the company would allocate the shares was posted in return. After they posted their letter of acceptance, but before she received their letter, she informs the company telephonically that she revokes the offer. Discuss the legal position of the parties.
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Ms. Uusiku posts a letter to TBA (Pty) Ltd with an offer to buy 1000 shares in the company. The
directors agreed, and a letter informing her that the company would allocate the shares was posted
in return. After they posted their letter of acceptance, but before she received their letter, she
informs the company telephonically that she revokes the offer.
Discuss the legal position of the parties.
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Solved in 2 steps
- On February 2, Phillips induced Miller to purchase from her fifty shares of stock in the XYZ Corporation for $10,000, representing that the actual book value of each share was $200. A certificate for fifty shares was delivered to Miller. On February 16, Miller discovered that the book value on February 2 was only $50 per share. Will Miller be successful in a lawsuit against Phillips? Why or why not?: Umar applied to a company to buy some shares in April and paid a deposit. He didn’t hear anything from company until November when company sent him a letter of allotment as acceptance and a request for the balance. By this time, Umar had changed his mind and no longer wanted the shares. Question a.Is Umar bound to buy the shares? Why or why not?Katy Kirkland, a former employee of the Sand Dune Resorts, Inc., owned 500 shares of stock (10%) in the company. Kirkland was terminated after five years of employment at Sand Dunes; however, she became part owner of Holiday Isles, Inc., a competitor of Sand Dunes. When Sand Dunes made Kirkland an offer to purchase her stocks, she requested access to Sand Dunes' corporate books to determine the value of her 500 shares of stock. Sand Dunes refused on the basis that Kirkland was a competitor. Does Kirkland have a right to view the books? Why or why not? Propose a solution to the situation.
- KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ₱420,000; Accounts receivable -₱380,000; Inventories -₱250,000;Notes payable -₱100,000. PERRY agreed to contribute cash equal to 30% of KATY’s capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much should Perry contribute to the partnership?KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ₱420,000; Accounts receivable -₱380,000; Inventories -₱250,000; Notes payable -₱100,000. PERRY agreed to contribute cash equal to 30% of KATY’s capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much is the total assets of the partnership after the formation? *KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ₱420,000; Accounts receivable -₱380,000; Inventories -₱250,000;Notes payable -₱100,000. PERRY agreed to contribute cash equal to 30% of KATY’s capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much is the total assets of the partnership after the formation?
- In May, Parr and Presba, while in the course of negotiations with Barker (a salesperson for Quaker Hill) to purchase plants and flowers, undertook to organize a corporation to be named the Denver Memorial Nursery, Inc. On May 14 and 16, Parr signed two orders on behalf of Denver Memorial Nursery, Inc., which, to the knowledge of Quaker Hill, was not yet formed, that fact being noted in the contract. A down payment in the amount of $1,000 was made. The corporation was not formed prior to entering into the contract because Quaker Hill insisted that the deal be concluded at once since the growing season was rapidly passing. Under the contract, the balance of the purchase price was not due until the end of the year. The plants and flowers were shipped immediately and arrived on May 26. The Denver Memorial Nursery, Inc., was never formed. Quaker Hill seeks to recover the unpaid balance of the purchase price from Parr and Presba. a. What are the arguments that Parr and Presba are personally…George, an individual, is an architect and general contractor. Gracie is a wealthy individual. Newco’s Certificate of Incorporation states that it is authorized to issue 200 shares, no par value of common stock. Gracie transfers $500,000 of cash to Newco in exchange for 50 shares of Newco's stock. George signs a contract with Newco in which George will perform services designing a housing project and then acting as general contractor on the construction of that housing project. In exchange, George will receive 50 shares of Newco's stock. a. How will A be treated in this transaction? b. Suppose instead that George and Newco do not enter into a written contract. George transfers $500 in cash for 50 shares of Newco's stock while Gracie transfers $500,000 for 50 shares of Newco's stock. George then performs the architectural and contracting services for no further charge. Would this change your answerPaula, Fred, and Stephanie agree that Paula and Fred will form and conduct a partnership business and that Stephanie will become a partner in two years. Stephanie agrees to lend the firm $50,000 and take 10 percent of the profits in lieu of interest. Without Stephanie’s knowledge, Paula and Fred tell Harold that Stephanie is a partner, and Harold, relying on Stephanie’s sound financial status, gives the firm credit. The firm later becomes insolvent, and Harold seeks to hold Stephanie liable as a partner. Should Harold succeed? Explain.
- Wilson Corporation granted an incentive stock option to Reva on January 1, two years ago. The option price was $300, and the FMV of the Wilson stock was also $300 on the grant date. The option allowed Reva to purchase 150 shares of Wilson stock. Reva exercised the option on August 1, this year, when the stock's FMV was $400. Unless otherwise stated, assume Reva is a qualifying employee. The results of the above transactions to Reva will be a. no income to Reva on the grant date or exercise date but there is an alternative minimum tax adjustment item to Reva of $15,000. b. no income tax or alternative minimum tax effect for Reva. c. ordinary income to Reva on the exercise date of $15,000. d. capital gain to Reva on the exercise date of $15,000.Your supervisor has asked you to research his client’s stock transaction to ensure it is treated correctly on their tax return. She has outlined two major issues she would like you to find answers for. Using the Internal Revenue Code and other valid sources, write a short memo to answer her questions. To: CPA Boss From: CPA Candidate Re: XYZ Stock Fiasco Date: April 10, 2022 Facts: Jack and Sally own 1,000 shares of XYZ stock. They originally purchased the stock on August 7, 2008, for $20/share. On March 12th they sold all 1,000 shares of XYZ for $10/share. On April 1, 2021, Jack heard that XYZ’s stock price was going to skyrocket and purchased 1,000 new shares of XYZ for $13/share. 1. Can the taxpayers claim a capital loss on the XYZ stock they sold? If so, how much may they deduct on their 2021 return? 2. What is their basis and holding period of the stock purchased?