The Outcome from the Acquisition of Mason Machining

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The Outcome from the Acquisition of Mason Machining, Inc. by Jefferson Industrial Machines Jody L. Thompson ACCT618-1502A-01 Professor Leslie Cooper – Blood Phase 4 Individual Project Colorado Technical University Abstract The intended purpose of this paper is to establish and the outcome that comes from the acquisition of Mason Machining, Inc. by Jefferson Industrial Machines. By ensuring that the proper understanding of the overall outcome of the acquisition of Mason Machining, Inc. by Jefferson Industrial Machines is understood will help both corporations to understand what is going to happen to the shareholders and the corporations regarding tax liabilities and corporate gains. Jefferson Industrial Machines acquired Mason Machining, Inc. with assets having a FMV of $1,775,000 and an adjusted basis of $995,000 and $200,000 in liabilities to JIM in exchange for $750,000 in cash and $800,000 of JIM's common stock. This paper will discuss or explain the following about the acquisition of the companies: it will explain the type of merger that occurred with this type of information being converted between the companies. Then it will show the calculations that will show the gains that Mason Machining, Inc. will get from this transaction. Next, will be an explanation of how Mason will recognize the gains. Next, the tax liability that will be incurred by Mason Machining, Inc. from this transaction will be explained. The next process will be to calculate the amount of gain the shareholder’s from Mason Machining, Inc. will be able to realize and recognize from the transfer of stocks and assets between the two corporations. The next process will be to explain how much tax liability the shareholder’s will incur from the transfer of stocks between the corporations. And finally an explanation of the tax implications that Jefferson Industrial Machines will be

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