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QUESTIONNAIRE FOR CORPORATIONS

1. Name and Address of Client: __________________________________________________

___________________________________________________________________________

2. Fee Quoted? If so, how much? ________________________________________________

3. Name of Corporation: ________________________________________________________

A. State of incorporation:

B. Profit Nonprofit

If Nonprofit: Membership Directorship or Stock

C. Assumed Names?

D. Any trademarks, service marks or trade names used in connection with the business?

Discuss whether marks should be protected with federal and/or state registration. Should a search be ordered?

E. Purpose clause (nonprofit only):

F. Authorized capital stock: (Note: There is a franchise fee of $50 for 0 to 60,000 shares of authorized capital stock. Therefore, you normally authorize at least 60,000 shares because there is no extra charge up to that amount.)

Common Shares:

(complete the following only if more than one class of stock is being issued)

Preferred Shares:

Statement of all or any of the relative rights, preferences, and limitations of the shares of each class is as follows (in most situations, none):

G. Names and addresses of incorporators:

H. Director liability language to be added to Articles?

I. Additional provisions to be placed in the Articles of Incorporation (in most cases there will not be any):

4. Check Name Availability with the State?

____ Yes

____ No

If yes, when checked? ________________________________________________________

5. Street address of registered office (cannot be a post office box number. The registered office is supposed to be the business office of the resident agent):

___________________________________________________________________________

6. Mailing address if different from above:

___________________________________________________________________________

7. Name of Resident Agent: ____________________________________________________

8. Will we complete IRS form SS-4 and obtain the federal employer identification number?

____ Yes

____ No

If we are obtaining the EIN, please complete the following:

A. Name of Member to sign SS-4 __________________________________________

B. Social Security Number of Member to sign SS-4 ___________________________

C. Date business started or acquired _________________________________________

D. Highest No. of Employees expected in first 12 months _______________________

E. Date first wages to be paid (if applicable) _________________________________

F. Principal activity of business ____________________________________________

G. Is the principal business manufacturing?

____ No

____ Yes. If Yes, what are the principal products and raw materials? _________

H. Who will products or services be sold to?

____ Business (wholesale)

____ Public (retail)

____ Other (specify) _________________________________________________

____ N/A

9. Memorandum of Action Adopted by Incorporator(s).

A. Members of the Board of Directors are as follows:

B. Short Form Bylaws Or Long Form Bylaws

(Major differences between short form and long form Bylaw: long form Bylaws have more in-depth indemnification language and outline specific duties of officers)

C. Bylaws should be adopted so that there are directors.

D. Bylaws should be changed as follows:

10. Prepare first Board of Directors meeting or

Prepare Memorandum of Action By the Board of Directors

A. Officers of the Corporation are:

President:

Vice‑President:

Secretary:

Treasurer:

Others:

B. Plan to issue 1244 stock: ______ (yes or no)

(Note: We usually issue shares as "1244 stock". Ordinarily, a shareholder who realizes a loss on a stock investment may obtain only a capital loss deduction for income tax purposes. This capital loss deduction is available as an offset to ordinary income in only a very limited way. If the loss is realized on so‑called "Section 1244 stock", a part or all of that loss can be taken as an ordinary deduction, as an offset to ordinary, non‑capital gain income without limitation.)

C. Issuance of stock to shareholders:

No. of Shares In Exchange for Dollar

Name of Shareholder To Issue Amount or Property

Put restrictive legend on back of each certificate?

D. Tell client to open corporate bank account and provide us with a copy of Resolution?

E. Contracts can be signed by the following (check all that apply):

President:

Vice President:

Secretary:

Treasurer:

G. Prepare a Stock Redemption Agreement?

11. Prepare Bill of Sale transferring certain assets listed in Exhibit?

12. Prepare Assignment? ____________:

If yes, name: Leases:

Cars: Franchises:

Patents: Partners' partnership interests:

Other registered assets:

13. Prepare Deeds

14. Prepare a Medical Reimbursement Plan for the benefit of employees

Qualified employee: (1) Employed by the company three or more years; (2) Age 25; (3) Full‑time employee

Maximum limit of Dollars or % of salary.

15. Lease to be written Terms:

16. Employment Contract to be written

Terms: Salary $ Covenant not to compete

Other:

17. Employee Handbook to be written?

18. Which method of accounting will the Corporation be using?

Cash: ____________

Accrual: ____________

19. Send form investment letter to Corporation from shareholders

20. Send form investment letter to shareholders from the Corporation

21. Send letter to transferor and shareholders of transferor re: 351 transfer (information which must be sent to the IRS in the transferor's return

22. Send bill re: incorporation and indicate that the costs of incorporation can be prorated over 60 months

23. Set up corporate record book ($50)

24. Should this client be added to the annual minutes reminder service?

newsletter list?

25. Prepare a Stock Redemption Agreement? ________ If so, complete the following:

A. Use Prototype

With the following changes:

__________________________________________________________________

B. Other:

1. Transfers on Death:

a. Mandatory sale/mandatory purchase

b. Optional sale/forced purchase

c. Other:

2. Incapacity Provisions

3. Purchase Price on Death:

a. Certificate of value:

* Fair market value determined by appraisers

* Net book value determined by accountant

* Adjustments by appraisers

* Adjustments by accountant ___________________________

b. No certificate of value:

* Book value determined by accountant _________________

* By appraisal if objection ____________________________

4. Payment:

* % down

* balance in installments

* Frequency of installments ‑ monthly or annually

* Interest rate %

* Prime rate determined by reference to (name of bank):

* Acceleration on note

* Note guaranteed by other shareholders

* Escrow account

* Estate hold stock as collateral

5. Lifetime Transfers:

* Mandatory sale and purchase

* Right of first refusal to

* Must offer to corporation, then to remaining shareholders

* Option period ‑ 30 or 60 or 90 days

* Price and terms:

* By agreement __________________________________ or

* As offered by 3rd party _____________________________

6. Must sell stock on termination of employment

* Corporation has option

7. Preemptive Rights _______________________________

8. Board of Directors (agree to elect each other)

9. S Election ______________________________________

10. Covenant Not to Compete _______________________________________

years miles from

11. Other Provisions

NOTES:

* For the buy‑sell agreement to fix the estate tax value of the stock in the closely held corporation pursuant to Treas. Reg. 20.2031‑2, there must be a mandatory buy‑out upon the death of the shareholder and during the shareholder's lifetime there must at least be a right of first refusal by the corporation to purchase at an established price.

* Discuss with client IRC §2036(c) as it relates to stock from the estate of a relative.

* Remember to forbid the selling shareholder to vote on the exercise of the corporation's right of first refusal.

* If so, the Bylaws should provide that the insured is not to participate in decisions relating to life insurance on his life. This is so that IRS cannot argue that the deceased shareholder had an incident of ownership in that insurance during his life. See §2040 of Code.

26. Is the corporation to be a sub‑chapter S corporation?

If so, prepare Form 2553 Sub‑S Election? _______________

Name and Social Security Numbers of Shareholders:

27. Does the Corporation plan to have a qualified retirement plan?

____ Yes

____ No

If yes, are we to prepare the documentation?

____ No

____ Yes

Note: If yes, see Pension Department for appropriate questionnaire.

28. Have we discussed the intangible tax issue with the client?

____ Yes

____ No

29. Does client need preincorporation agreement?

Terms of which are:

30. Qualification in other states?

31. Federal or state security laws.

A. Are all of the shareholders residents of the State of Michigan?

NOTE: The intrastate offerings exemption under the Securities Act §3(a)(11); Rule 147 of the SEC may be available if all of the offerees are residents of Michigan.

B. If not all of the offerees are residents of Michigan, how many offerees are there?

C. Are all of the offerees sophisticated?

D. Do all of the offerees have access to information which would be needed to make a good business judgment as to whether to purchase the shares?

E. Has their investment letter been signed?

F. Do their certificates have legends with investment restrictions?

NOTE: If the intrastate exemption does not apply, the private offering exemption under the Securities Act §4(2) may apply. See proposed Rule 146 of the SEC which may be adopted soon.

G. Review with regard to 351 transfers.

1. Review the balance sheet of the assets to be transferred from one organization to the new corporation.

2. Is there going to be 357(c) liabilities in excess of basis of the assets problem?

This is probably only a problem if the transferor has a lot of accounts receivable which he is transferring to the new corporation, which have a zero basis, and in addition, has a lot of liabilities which he is also transferring to the new corporation.

3. Is there a 357(b) tax avoidance purpose problem? ____________________

4. Does the transferor have a business purpose? ________________________

As a rule of thumb, keep back (in the transferor) Accounts Receivable equal to the Accounts Payable. This eliminates two problems. It prevents the possibility that liabilities transferred might be greater than the basis of assets transferred, and it prevents the Service from arguing that the new corporation does not get a deduction for the accounts payable because it is not an expense item, but just a liability. For cash basis taxpayers this rule is mandatory. The partnership or proprietor, or unincorporated association must keep its accounts payable to be able to deduct those receivables equal to the accounts payable.