MEMORANDUM
TO: Michelle Nessa, Account Manager
FROM: Yixin Wang, Tax Specialist
DATE: October 21, 2014
SUBJECT: Recommendations for MTL, Inc.’s Potential Assets Disposal
Our client, Greg Thomson, has concerned about the tax consequences of the disposal
of two assets of the MTL, Inc., land and stock, which will not appreciate or add value.
The issue is whether the land and the stock to be sold or exchanged with another party.
My analysis comes up with two options: MTL should not sell the land and exchange the
stock if no other assets will be sold, or exchange the land and sell the stock if other
assets will be sold and it has loss carried forward to the tax year 2014. This memo
includes relevant information of background, tax consequences and recommendation of
land and stock disposal.
Background
In 2010, the land was acquired for $500,000 and which is not going to appreciate. And
the $200,000 stocks cost purchased April 2014 is below performance. After analysis, the
MLT decided to dispose the two assets by exchanging or selling. As to the land, it can
be either sold to a buyer for $550,000 or exchanged with another land of an identified
buyer. In terms of the stock, it can be either sold at current fair market value for
