John Van Kirk Owns All the Stock of Monmouth Restaurant

question 95

Essay

John Van Kirk owns all the stock of Monmouth Restaurant Corporation in Pittsburgh. John would like to sell his business and retire to sunny Florida now that he has turned 65. Pam, a long-time bartender at Monmouth Restaurant, offers to purchase all the business's noncash assets in exchange for a 25% down payment, with the remaining 75% being paid in five equal annual installments. Interest will be charged at a 10% rate on the unpaid installments. John plans to liquidate the corporation that has operated the restaurant and have Monmouth Restaurant distribute the installment notes and any remaining assets. What tax issues should Monmouth Restaurant, John, and Pam consider with respect to the purchase transaction?

---

Definitions:

One-way ANOVA

An analytical procedure designed to evaluate if distinct, unrelated groups of three or more have statistically meaningful differences in their mean values.

Nonsmoker

A person who does not smoke cigarettes, cigars, or any other tobacco products.

Null Hypothesis

A statement used in statistics that proposes there is no significant difference or effect, serving as the default or initial presumption to be tested.

One-way ANOVA

A statistical test that evaluates the differences between the means of three or more independent groups on a single factor.