Legal Question in Business Law in New York

We are forming a new C-Corporation (�NewCo�) which we want to own assets from two other entities; one is an LLC partnership (formed in NJ), the other is an S-Corporation. (formed in Delaware) that currently has 3 shareholders. Our objectives are as follows:

1. To exchange shares of the new company for the assets that are being acquired

2. To avoid creating any immediate tax liability for the LLC partners or the S-Corp shareholders

3. To establish reasonable value of acquired assets on the books of NewCo (to support a reasonable valuation for the new C-Corp)

Our own research seems to indicate that the following approach would make the most sense:

1. Establish NewCo with one initial shareholder (this person will also be a shareholder of the S-Corp)

2. Once NewCo has been established with shares authorized and initial shares issued to the founding member, NewCo will exchange stock for the assets of the LLC and S-Corp.

3. For the S-Corp, it seems a �Type A� Tax-Free Reorganization will make the most sense. It�s our understanding that in this scenario, all assets of the S-Corp can be acquired by NewCo in exchange for NewCo common stock (100% of assets exchanged for stock � no cash or �boot�). The S-Corp would then be dissolved. No immediate tax liability would be created for S-Corp shareholders, who would now hold shares of NewCo. Assets of the S-Corp would be placed on the books of NewCo at fair market value (note: please confirm if assets can be valued at FMV on NewCo�s books � this is the one point for which we could not find a definitive answer online).

4. On the same day that NewCo completes the above transaction with the S-Corp, it would also execute a transaction with the LLC. In this transaction, the LLC would contribute assets to NewCo in exchange for stock (65% of NewCo). It�s our understanding that there would be no immediate tax consequences here, rather tax would be paid later when the shares of NewCo were liquidated, with the tax consequences of the liquidation passing through the LLC partnership to its individual shareholders.

The end result of the above steps would be that NewCo has four individual shareholders:

� The founding member who received shares in two transactions; (1) during initial creation of NewCo and (2) as a member of the S-Corp during the Type A Tax-Free Reorganization

� The other two members of the S-Corp who received shares during the Type A Tax-Free Reorganization

� The LLC which would hold shares itself as an entity (rather than having its individual shareholders hold the shares as with the S-Corp)

In addition:

� The NewMedCo books include assets from the S-Corp and the LLC, each valued at the Fair Market Value at the time of their transactions, plus any additional assets NewCo acquired separately on its own.

� None of the parties involved would have any tax liabilities until shares of NewCo were liquidated.

It would be greatly appreciated it you could kindly confirm that all of the above makes sense and would hold up to IRS scrutiny and due diligence from potential future investors. If you respond, please also message us with you price quote to create an opinion letter regarding the validity of the deal structure outlined above.

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