for Memorandum Mr. 3, August Emrick 1940 pany as a separate corporation would be exempt from the tax but that the further requirement of filing a consolidated return would throw them right back into the classification of @ regular corporation. In other words, the gross income of the Browning and Company Arms the thereby their income pany status. 20% of than personal the of out them be more would B Company Bar taking com- holding As you know, we have from time to time prepared We have @ number of plans for discussion with Mr. Browning. always come back to the same conclusion that it would not be As a part the proper thing to do to liquidate the corporation. of this memorandum, we refer you to our memorandum for discussion dated December 7, 1939, which will be very interesting I am sure and may save you considerable work. Getting back to wishes advice, they Browning (a) the are Consider the of other questions upon which enumerated as follows: possibility a new corporation paid all of the into royalty of the formation which would Mr. be contracts. Just what effect would this have upon the in the light of the Young and Benzel decisions. parent company, Also would it involve placing a value upon the royalty contracts. If so, upon what past basis and would future (b) be Consider of used and what affect might it have years. the J. the possible partial liguidation M. & M. Browning Company ing in that tracts. company S. only the royalty leavcon- Our memorandum of December 7, 1939 covers this It would, of course, have to be brought up to date question. in the light of changed values since September 30, 1939 and any new data we might have on the tax situation generally. (c) Consider the consolidation of the Lindsay Land & Livestock Company and the Browning Arms Company. It appears that the Browning Arms Company may, through a recent contract with the Remington Arms Company, be in a position to go forward and make earnings in the future. The Bar B Company is heavily indebted to the parent company. Could some plan be worked out to take advantage of this situation.