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The arrowroot corporation is engaged in the manufacture and distribution of fine spices for the restaurant market. it has been in this business for 30 years. arrowroot has also been in the specialty foods business for 10 years selling gourmet foods through large grocery chains. both businesses have been very profitable and arrowroot has significant earnings and profits. arrowroot is owned entirely by bob hughes. in june of 2019 arrowroot decides to expand its specialty food business through catalogue sales. needing financing to expand its business arrowroot approaches its bank who suggests separating the two businesses and having them separately owned by bob as brother-sister corporations. the bank would then loan money to the specialty foods business for its expansion purposes.
(a) you are asked as to whether the separation of the businesses can be done without federal income tax. if so, how can it be done?
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