1. Corporate Name

1. Corporate NameFirst preference ______Second preference ______Third preference ______(Must contain the word Corporation, Company, Incorporated, or Limited or the abbreviation Corp., Co., Inc., or Ltd. or, if a professional corporation, Professional Corporation or PC. Try to avoid using Company or Co. because it could indicate a partnership.)Assumed Name ______(The company may transact its business under an assumed name for renewable periods expiring December 31 of the fifth full calendar year following the year in which it is filed.)Check with the Corporation Division for the availability of the name by calling (517) 241-6470.2. Registered AgentName ______Phone ______3. Registered Office(Must be a business address of the registered agent.)Street address ______City ______, County ______, MichiganZip code ______Office phone ______Home phone ______4. Purposes for which the corporation is to be formed, if other than general purposes of a professional corporation.____________5. IncorporatorsOne incorporator is required, but try to have all proposed shareholders act as the incorporators to take advantage of the registration exemption in Michigan Blue Sky Law.Name ______, Social Security #_____-_____-_____Address ______Number of shares to be purchased ______, Class ______Name ______, Social Security #_____-_____-_____Address ______Number of shares to be purchased ______, Class ______Name ______, Social Security #_____-_____-_____Address ______Number of shares to be purchased ______, Class ______6. Directors(One or more is required.)Name ______Address ______Name ______Address ______Name ______Address ______7. Officers One person may hold two or more offices. However, an officer cannot execute, acknowledge, or verify an instrument in more than one capacity if law, the articles, or bylaws require two or more officers to execute the instrument, e.g., stock certificates. Avoid having spouses as officers and/or directors to protect entireties’ property against tax officials and/or creditors who pierce the corporate veil.President ______Social Security #_____-_____-_____Home address ______Home phone ______Date of birth ______Vice president ______Social Security #_____-_____-_____Home address ______Home phone ______Date of birth ______Secretary ______Social Security #_____-_____-_____Home address ______Home phone ______Date of birth ______Treasurer ______Social Security #_____-_____-_____Home address ______Home phone ______Date of birth ______8. What do each of the participants expect to gain from the enterprise, e.g., employment, dividends, interest on loans, fringe benefits, capital appreciation?Name ______Name ______Name ______9. Authorized Equity CapitalizationNumber of Shares Use Standard Preferred ______Common ______Number of Shares Other Common ______Preferred ______Rights and Restrictions: Standard: ______OtherStock Restrictions and/or Designations. Describe voting, dividend, liquidation, cumulative voting, preemptive and other rights, preferences, and limitations for common and preferred stock if different from those contained in the sample articles of incorporation.10. Actual Capitalization a. Equity.Promoter, Address and # of Shares and Price Cash or Property and Phone Class Terms ______$______$______$______$______$______Issue shares in name of promoters, jointly with spouses, or to a trust?______Contact the attorney handling their estate plan?______ b. Options.____________ c. Debt.Name of Lender Amount To Be Paid On % Secured ______$______$______$______d. Thin incorporation. Discuss the tax and nontax dangers (e.g., dividend treatment on “loan” payments and loss of limited liability) of thin incorporation with the client. Compute the initial debt-equity ratio.Shareholder Debt + Nonshareholder Debt = ______+ ______EquityThen ask the following questions:___ Is there a promissory note evidencing the obligation?___ Is there an unconditional obligation for payment of principal and interest?___ Are there payments at a fixed date not unreasonably far in the future (8–10 years)?___ Is there interest at the prevailing fair market rate and not dependent on earnings or the discretion of the board of directors?___ Is there no subordination in priority to general creditors?___ Are there no voting rights?___ Are there disproportionate holdings of stock and debt?___ Are there corporate formalities clearly showing what assets are transferred for debt and stock, respectively?___ Is there a debt-equity ratio of 10:1 or less?___ Is there equity investment sufficient to cover the assets “essential” to the enterprise?___ Are there earnings projections showing sufficient cash flow to repay the debt according to its terms?___ Is there approval and treatment of the debt as such in the corporate minutes and financial records and statements?___ Are there actual payments made according to the terms of the note? e. Section 351. Is this a Section 351 transaction, and is there any recognition of gain by any shareholder because of his or her receipt of boot (property other than the corporation’s stock) or the assumption of liabilities by the corporation or liens on the property transferred to the corporation? Will there be a change from accelerated depreciation to straight-line on nonrecovery property? f. Price differences. Is there any difference in the price of stock or a discriminatory valuation of the property transferred to the corporation that will give the Internal Revenue Service a basis to allege that a gift was made or compensation received under Treas Reg 1.351-1(b)(1)? g. Section 1244. Provide for Section 1244 stock in the minutes and on the certificates. Does the client understand the trade-off of advantages between use of Section 1244 stock and debt? h. Leasing. What assets that are owned by the shareholders can be leased? ______What are their fair market values? ______What is the term of the lease? ______What is the fair market lease rate? ______Should the lessor carry product liability insurance? ______ i. Sales to corporation. What assets can be sold to the corporation by shareholders?Asset Fair Market Value Seller’s Basis Sale Price and Terms ______Will there be gain, recapture of depreciation, or investment tax credit on any of the above assets? ______ j. Initial balance sheet. What will the initial balance sheet of the corporation look like immediately after the purchase of the stock?Assets Liabilities Cash ______Accounts payable ______Equipment ______Notes payable ______Notes receivable ______Equity Inventory ______Common stock ______Real estate ______Paid-in surplus (optional) Preferred stock ______Total assets ______Total equity ______TOTAL LIABILITIES AND EQUITY ______k. Securities law. Which exemptions to federal and state law will apply?State Federal ______Limited offering exemption ______Intrastate offering §3(a)(11) (MCL 451.2202(1)(n)) (15 USC 77c) and Rule 147 (17 CFR 230.147) promulgated thereunder ______Employee plan exemption ______Private offering §4(2) (15 (MCL 451.2202(1)) USC 77d) and Regulation D promulgated thereunder Regulation A §3(b) public offerings not exceeding $5 million in any 12-month period (17 CFR 230.251-.263) (effective June 19, 2015, the exemption increases to $20 million for tier 1 offerings and $50 million for tier 2 offerings; see 80 Fed Reg 21,806 (2015)) Regulation D and Rules 504, 505, and 506 promulgated thereunder (17 CFR 230.501 to 230.508) Accredited Investors §4(6) (15 USC 77d(a)(5), §2(15) and Rule 215 (17 CFR 230.215) Sales of Securities/Employee Benefit Plans under Rule 701 (17 CFR 230.701)Despite the exemptions from registration, is there any hint of misrepresentation or a reluctance to disclose by any of the promoters?11. S Corporation ElectionS corporation election may be advisable; many factors must be taken into account: the shareholders may not have a sufficient loan and equity investment to be able to pass through the losses; the shareholders may wish for any losses to be carried forward in the corporation; or the corporation may not qualify initially for S status. The new corporation must be able to meet all of the following tests to qualify as an S corporation:___ The S corporation may not be a member of an affiliated group (a series of 80 percent owned corporations connected through a common parent). ___ Only one class of stock may be issued and outstanding, i.e., no preferred stock can be issued.___ No shareholder can be a nonresident alien.___ All shareholders must be individuals, estates, certain exempt organizations, qualified plans, tax-qualified retirement plans, tax-exempt organizations under IRC 501(c)(3), or qualified trusts including an electing small business trust, i.e., no corporate shareholders.___ There must be 100 or fewer shareholders.___ The S corporation may be wholly owned by another S corporation.12. Other Tax Elections a. Books (IRC 446) are to be kept on the following:Cash Accrual Hybrid Tax purposes ______Corporate purposes ______Describe the hybrid method ______The above decisions should be made after discussions with the corporation’s accountant. b. Organizational expenses (IRC 248) will be deducted over [number] months (not more than 80 months). c. Inventory (IRC 472) will be valued using first-in, first-out ______or last-in, last-out ______. d. Bad debts (IRC 166) will be accounted for on the reserve method ______or specific write-off ______. e. Regarding surtax allocations, what other corporations are owned by the shareholders and in what percentages? ____________.Is the corporation a member of an 80 percent parent-subsidiary or brother-sister control group under IRC 1563? ______. If yes, discuss the need for an election to allocate the one surtax exemption with the annual return and the limit this puts on the tax advantages of the corporation (and possibly other corporations owned by the shareholders). f. Fiscal year election (IRC 441).______ g. Depreciation. Standard ACRS? ______Straight line? ______Accelerated? ______First year write-off? ______13. Stock Restrictions and/or DesignationsDescribe voting, dividend, liquidation, cumulative voting, preemptive and other rights, preferences, and limitations for common and preferred stock if different from those contained in the sample articles of incorporation.__________________14. Annual meeting—board of directors ______15. Annual meeting—shareholders ______16. Banking(List name of account, bank, and branch and include signatures.)1.____________2. ____________17. Shareholder Agreement(Compulsory or elective buyout?) Initial value? $[amount]. If no value, reset in two years, then book value plus ______times corporation’s earnings for past ______years. Funded by insurance? ______Other provisions ____________18. Accountant Name ______Address ______Phone ______19. Insurance AgentName ______Address ______Phone ______20. Employment AgreementEmployee ______Address ______Phone ______Term ______Salary ______Bonus______Fringe benefits—medical and hospital insurance, standard or luxury car, expense allowance, gas, $[amount] term life insurance, [number] weeks vacation, other ____________21. Qualify in other states? ______22. Medical reimbursement plan? ______Employees covered ______Limits ______23. Other CounselWhich participants are represented by corporate counsel? ______Which other participants have separate counsel reviewing their participation in this corporation or estate planning? ______How much consultation should there be with other counsel? ______What understanding is there of possible conflicts of interest with counsel? ______

1. Corporate Name

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