What difference would it make if bay were newly corporation

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Reference no: EM131974025

Problem

The San Diego Bay Boat Storage and Marina Corporation ("Bay") was formed in 1999 as a C corporation and had substantial accumulated earnings and profits. Bay's business consists of three primary activities. About one-third of Bay's gross receipts are derived from marine service and repair work conducted by its two mechanics. Another one-third of Bay's total receipts come from the rental of berths to boat owners. Berthing fees vary depending upon the size of the particular boat. A boat owner renting a berth from Bay must pay a separate charge to have Bay's employees launch or haul out his boat. However, if given advance notice, Bay employees will fuel an owner's boat, charging only for the fuel. The remainder of bay's receipts come from dry storage of boats. Owners pay $200 per month for dry storage in Bay's warehouse where a Bay employee is on duty 24 hours a day. For this fee, Bay employees will launch, fuel (with a charge for fuel) and haul out the boat whenever requested by the owner. Bay's mechanics also will perform a free engine analysis every other year for owners of power boats in dry storage.

Bay is considering the possibility of making a Subchapter Selection and has requested your advice concerning any problems which it may have. What difference would it make if Bay were a newly formed corporation?

Reference no: EM131974025

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