Assignment
Part I
Tax Memo I: Entity Formation
The purpose of this memo is to help you to develop skills in researching and to effectively write about the concepts and issues regarding entity formation. You are responsible for discussing the pros and cons of each type of business entity and for providing the "client" with an overview of its entity choice options, based on the client's goals and objectives. The final deliverable for this project is a written memo that addresses all of the client's questions and concerns as presented in the scenario below. Your Tax Memo should follow the standard FICA (Facts, Issues and Conclusions, Analysis) format. Please see the Example Tax Memo in the Week 5 Content area of LEO.
Instructions:
You are a new accountant working for the accounting firm, Sand & Sea CPAs LLP. Juan Orlando, the principle partner in your firm has asked you to work on a consulting project for him. Two clients, Earl Jackson and Kathy Hamilton, wish to form a business together by combining two existing companies. Your task is to research to most appropriate form of business organization for this union, and write a Tax Memo outlining your conclusions. The attached two email exhibits provide further information for your task. NOTE - to view these, you must open this assignment folder. The exhibit file is attached below these instructions.
In addition to the form of organization, your Memo should discuss your recommendations regarding the following issues:
Accounting method: Cash or accrual.
Tax year.
If the existing businesses must liquidate to form the new organization.
Liability considerations.
Taxation of the business, and owners.
Part II
Tax Memo II: International Taxation
The purpose of this memo is to help you to develop skills in researching and to effectively write about the concepts and issues regarding entity formation. You are responsible for discussing the pros and cons of each type of business entity and for providing the "client" with an overview of its entity choice options, based on the client's goals and objectives. The final deliverable for this project is a written memo that addresses all of the client's questions and concerns as presented in the scenario below. Your Tax Memo should follow the standard FICA (Facts, Issues and Conclusions, Analysis) format. Please see the Example Tax Memo in the Week 5 Content area of LEO.
Instructions:
You are a new accountant working for the accounting firm, Sand & Sea CPAs LLP. Juan Orlando, the principle partner in your firm has asked you to work on a consulting project for him. Two clients, Earl Jackson and Kathy Hamilton, have formed a business together based upon your previous recommendations in the Tax Memo I. At this time, they wish to expand their operations overseas. However, they are unsure about which foreign location would be most advantageous for them. Building upon your previous advice (assume that they have taken your suggestions), select the foreign country that you feel would be best. You should use the Ernst & Young Worldwide Corporate Tax website to do your research, as well as current US Treasury regulations. Be sure to address the following issues in your memo:
Repatriation of overseas profits
Treatment of Capital gains, Interest and Dividends
Taxation on foreign earned income
Intercompany transfers
Part III
Comprehensive Tax Project
The purpose of this assignment is to test your knowledge, understanding, and ability to apply course concepts. You will solve a comprehensive tax problem and provide supporting documentation for your stated conclusions.
Kimberly Corp. is a calendar year accrual basis corporation that has been in business for 25 years. The income and expenses that appear on Kimberly's records for the year ended December 31, 2016 are in the attached file.
Requirements:
Calculate Kimberly's taxable income (or net operating loss) for the year .
Determine Kimberly's tax liability for the year.
Be sure to use the tax formula that we have studied in the Roger CPA review course material. Please show all your work.
Analyze the impact of the dividends-received deduction on Kimberly's taxable income.
Kimberly Corp. is contemplating making a charitable contribution that would be deductible in 2016. It would like to give the minimum amount necessary to maximize its tax benefit from the deduction for 2016. Analyze the effect this contribution will have on Kimberly's taxable income for 2016. Please write a 1- 2 page summary of your position, supported by Tax research, and properly cited.
Comprehensive Tax Project Data
|
Revenues and Gains
|
|
|
Gross sales
|
$1,000,000
|
|
Dividends:
|
|
|
30%-owned domestic corporation XYZ Corp.
|
$400,000
|
|
Interest:
|
|
|
Vermont State bonds
|
15,000
|
|
U.S. treasury bonds
|
35,000
|
|
Gain on sale of XYZ stock
|
175,000
|
|
Key person life insurance proceeds
|
300,000
|
|
Total
|
1,925,000
|
|
|
|
Costs and Expenses
|
|
|
Cost of goods sold
|
650,000
|
|
Salaries and wages
|
420,000
|
|
Depreciation
|
100,000
|
|
Entertainment expense
|
20,000
|
|
Key person life insurance premiums
|
15,000
|
|
State income taxes
|
10,000
|
|
Federal income taxes
|
45,000
|
|
Rent, Utilities, etc.
|
200,000
|
|
Other expenses
|
50,000
|
|
Total
|
1,510,000
|
|
Net Income
|
$415,000
|
Attachment:- Tax_Memo_i_Part_i.rar