A
MEMORANDUM
To:
From:
Re:
Date:
BRIEF ANSWER
The introductory sentence or paragraph should identify the client, and indicate what the client wants. Concisely state your conclusions to the issues raised by your client and
iefly state your overall rationale.
STATEMENT OF FACTS
The body of the statement of facts should describe the legally significant and key background facts in an objective, generally chronological or topical manner.
ISSUE/S
The question generally takes the form: Does/Whether this tax law provision apply to these legally significant facts?
DISCUSSION
A.
Thesis Paragraph:
Begin the discussion section with a thesis paragraph that introduces the reader to requirements of achieving your client’s stated objectives. Also, need to state your prediction relating to your client’s desired objective in the order discussed in the balance of your discussion section.
B.
Identify first requirement for achieving your client’s objective:
1)
Topic sentence
2)
Fully define and synthesize the rule for the
first requirement for achieving your client’s objective
XXXXXXXXXXApply the facts to the stated rule (consider XXXXXXXXXXanalogizing/distinguishing case precedent)
XXXXXXXXXXArticulate any counter argument (consider analogizing/distinguishing case precedent)
XXXXXXXXXXConclude with respect to the first requirement
C.
Repeat the process described in item B for the remaining requirements necessary to achieve your client’s objective
If there are more than one issue, make sure to use sub-heading to address each issue. Each sub-heading must be presented in the same order presented in the thesis paragraph.
End with a goodwill closing to maintain professional relationship.
Accounting 620
On December 1, 2017, the Joel Freedman, owner of Advanced Technologies was
approached by Environmental Solutions, Inc., and offered to buy his company. After
consulting with his attorney and further negotiation with management of Environmental
Solutions, Mr. Freedman decided to go through with the transaction on August 1, 2018.
On August 15, 2018, a letter of intent was signed by Mr. Freedman’s attorney on his
ehalf, and the law firm representing Environmental Solutions, documenting the parties’
intention that Advanced Technologies would transfer all of its assets and liabilities to
Environmental Solutions for the sum of $ 5 million. The letter of intent was presented to
the Board of Directors of Environmental Solutions, Inc. on September 30, 2018, and on
that day the Board approved the final terms of the transaction and a proposed final
contract prepared by the company’s counsel. This transaction was consummated and
closed on October 15, XXXXXXXXXXYou have been asked to assist in meeting the tax
compliance requirements with respect to the transaction, and to provide tax advice as to
the consequences of the transaction to both the seller, Advanced Technologies, and the
uyer, Environmental Solutions.
Advanced Technologies was founded in 2009, by Joel Freedman and has always operated
as a sole proprietorship. Prior to starting this company, Mr. Freedman worked full time
as an environmental engineer for a large company. While employed, he pursued
scientific experimentation in the field of environmental and hazardous waste removal
technology on his own time. His research led to discovery of a new technique that could
esult in a more efficient and effective removal of hazardous waste. He promptly
patented this technology and decided to start his own company so he could put his new
technology to use. Therefore, he resigned from his position as an environmental engineer
and founded Advanced Technologies.
Data from the records of Advanced Technologies was presented reflecting the following
on date of the transaction:
Total Assets
Liabilities:
Accounts Payable
Accrued Payroll
Long-term Debt
XXXXXXXXXXTotal Liabilities
XXXXXXXXXXEquity
Contingent Environmental Claim
Advanced Technologies
Schedule of Assets and
Liabilities
Book Value
Fair Market
Tax Basis Value *
Assets
Cash
100,000
100, XXXXXXXXXX,000
Accounts Receivable
250,000
250, XXXXXXXXXX,000
Allowance for Bad Debts
(10,000)
XXXXXXXXXX,000)
Inventory
125,000
125, XXXXXXXXXX,000
Equipment
150,000
150, XXXXXXXXXX,000
Depreciation Allowance-
Equipment
(50,000)
(60,000)
Building
250,000
100, XXXXXXXXXX,000
Depreciation Allowance-
Building**
(20,000)
(10,000)
Intangible Assets (Patent) ***
220,000
25,000 1,000,000
1,015,000
680,000
2,050,000
Book Value
Tax Basis
Fair Market
Value
90,000
90,000
90,000
10,000
10,000
10,000
200,000
200,000
200,000
300,000
300,000
300,000
715,000
380,000
1,750,000
Liability (footnote disclosure)****
2,000,000
*The fair market values were determined by appraisals and valuations performed by
Advanced Technologies, and validated by Environmental Solutions, Inc. in its due
diligence process. Both parties agree as to the valuation of the assets, including any
impairment or decline in realizable value thereof, as reflected in the “Fair Market Value”
column of this schedule. The valuation allowance on accounts receivable was reviewed
in the due diligence period and was determined to reflect a