IRC was enacted by Congress to prevent tax

ACC565 Week 3 Discussion 1 and 2
]Section 306 of the IRC was enacted by Congress to prevent tax avoidance by distributing certain stock to a shareholder in a nontaxable stock dividend. Section 306 prevents shareholders from using a preferred stock bailout to convert ordinary income into a capital gain. Analyze the key provisions of Section 306 of the IRC, and outline a tax- planning strategy geared toward redeeming preferred stock with sale or exchange treatment as an alternative to Section 306.
ACC565 Week 3 Discussion 2

Per the text, the personal holding company (PHC) tax penalizes taxpayers that enter into tax-motivated transactions designed to shelter passive income of closely held corporations from higher individual tax rates. Suppose you represent a professional athlete who is the majority owner of a corporation. The corporation has several personal service contracts with advertising agencies and endorsements for your client in addition to passive income. Propose a plan in which you eliminate the potential for the PHC tax on the client’s corporation.

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The same client provides significant information on passive income at the end of the year, creating a potential PHC tax liability. Outline a plan for the current year in which you reduce the total tax liability for the client and include a proposal for future years to prevent PHC tax liability