Question - ABC Corp. owns 70% of the outstanding stock of XYZ Corp. Bob Smith owns the other 30% of XYZ Stock. On September 1 of this year, ABC Corp purchases all of Bob Smith's stock making ABC the sole shareholder of XYZ Corp. The stock was purchased by ABC with cash. On October 5 of the same year, XYZ adopts a plan of liquidation and officially liquidates on November 1.
Using your tax research tools, answer the following questions regarding this case:
• What tax issues are associated with this transaction?
• What are the tax consequences for all parties involved?
• If you were the tax advisor for this transaction, would you structure the liquidation any differently?