[Letterhead of DeJoya Griffith & Company, LLC]
Exhibit 8.1
Date: March 2, 2009
To: Amerigo Energy, Inc.
From: De Joya Griffith & Company, LLC
2580 Anthem Village Drive
Henderson, NV 89052
Subject: Amerigo Energy, Inc. & Granite Energy. Inc. Reorganization
OVERVIEW
It is my understanding that the reorganization of Amerigo Energy, Inc. and
Granite Energy, Inc. will be structured as follows: Amerigo Energy is a 12(g)
reporting company listed on the bulletin board. It has loss carry forwards and
essentially no operations. It will agree with Granite Energy to exchange
10,000,000 restricted shares of its newly issued common stock ( the "Amerigo
Stock") (essentially 80% of the Company) for substantially all the assets of
Granite Energy subject to insignificant liabilities. No cash will change hands.
Granite will hold on to the Amerigo Stock until the SEC approves a registration
statement for the Stock at which point the Amerigo stock will be distributed to
Granite stockholders. The Amerigo Stock will at that point constitute
substantially all the assets of Granite. Based on these parameters, we can take
a look at the Internal Revenue Code for guidance on the tax implications of the
reorganization.
RESEARCH
TAX-FREE REORGANIZATIONS - Non-recognition of income can sometimes be achieved
if the business acquisition or dissolution is accomplished through
reorganization. To qualify for non-recognition of income, Sec. 368(a)(1)
defines several types of tax-free reorganizations:
* "A"- a statutory merger or consolidation;
* "B"- an acquisition of stock in exchange for stock;
* "C"- an acquisition of assets in exchange for stock;
* "D"- a division whereby assets are transferred to another corporation;
* "E"- a recapitalization of a single corporation;
* "F"- a change in identity, form, or place of organization;
* "G"- a transfer of assets to a corporation pursuant to bankruptcy
reorganization.
Types A, B, and C reorganizations refer to acquisitions of corporations; Type D
is a divisive reorganization or applies to a division such as a spin-off of a
company. Types E and F refer to a continuing enterprise and Type G only
applies to reorganization out of bankruptcy.
DETAIL ON TYPE "C" REORGANIZATIONS
DEFINITION - A type "C" reorganization is governed by paragraph C of Section
368(a)(1) of the Internal Revenue Code. The paragraph is as follows:
"The acquisition by one corporation, in exchange solely for all or
a part of its voting stock (or in exchange solely for all or a
part of the voting stock of a corporation which is in control of
the acquiring corporation), of substantially all of the properties
of another corporation, but in determining whether the exchange is
solely for stock the assumption by the acquiring corporation of a
liability of the other shall be disregarded."
ASSET TRANSFER REQUIREMENT - To qualify as a Type "C" reorganization, the
target company must transfer substantially all of its assets solely in exchange
for the voting stock of the acquiring company (or its parent). Substantially
all of the assets of target must be acquired in the transaction.
"SUBSTANTIALLY ALL" REQUIREMENT - The Internal Revenue Service currently
interprets the "substantially all" requirement as being at least 90 percent of
the fair market value of the net assets and 70 percent of the fair market value
of the gross assets of the target company immediately prior to the transaction.
This requirement is consistent with the purpose of the Type "C" reorganization
provisions, which is to provide tax-free treatment to transactions that are
equivalent to mergers but are not effected under state merger laws.
PARTIAL PAYMENT IN CASH - In some instances, the selling shareholders may want
to receive property considerations (or "boot") other than the acquiring
corporation's stock, and usually the property desired is cash. Therefore, it
is possible for the buyer to pay some cash as part of this transaction.
However, at least 80 percent of the fair market value of the assets purchased
must be solely for stock, so only the remaining asset value can be paid for
with cash. The seller must pay income taxes on any portion of the purchase
that is not paid for with the buyer's stock.
LIABILITIES ASSUMED - In a Type C Reorganization, cash may be used to a maximum
of 20 percent of the fair market value of the selling corporation's assets, but
that amount is reduced by the liabilities of the selling corporation assumed by
the acquiring corporation according to IRC {section}386(a)(2)(B). With that
exception, the consideration must consist only of the voting stock of the
acquiring corporation (or of its parent corporation). In many instances, the
liabilities assumed exceed the 20 percent amount, resulting in no cash being
permitted. Moreover, the vagaries attendant with fair market value and
liabilities determinations should raise various caution signals before reliance
is made upon the 20 percent test.
DISSENTING SHAREHOLDERS - Any dissenting shareholders may have the right to
have their ownership positions appraised and then paid in cash. The extent of
these cash payments will increase the total proportion of non-stock payment
made, which can affect the non-taxable nature of the entire transaction. Thus,
a significant proportion of dissenting shareholders can prevent the Type "C"
reorganization from being used.
SUMMARY OF FINDINGS
The Type "C" reorganization is most useful when the target company is willing
to accept mostly stock in payment, while the acquiring company does not need
the selling entity, which is liquidated. The acquirer can also record the
acquired assets at their fair market value, which is generally higher than the
tax basis that would otherwise be inherited from the target.
Presuming Granite Energy will fully liquidate all of its assets (the stock) to
its shareholders and it does not break any of the other covenants listed above,
then the transaction should constitute a Type C reorganization and be tax free.
Very truly yours,
/s/ De Joya Griffith & Company, LLC
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De Joya Griffith & Company, LLC