Assignments

Discussion: "Gift Transfers and Gift Tax Planning"

Please respond to the following:

• Per the text and IRC, a gift occurs when the transfer of property is complete and the gift is valued at the date of the transfer. Imagine a scenario in which a client creates an irrevocable trust for his two grandchildren to ensure college education expenses are paid. The trust agreement requires the distribution of the income from the trust directly to the college or university the grandchildren attend for tuition while they are in college and directly to the grandchildren until age twenty-five after completing college. The income from the trust is distributed directly to the grandchildren until they reach age twenty-five, if they do not attend college. When the grandchildren celebrate their twenty-fifth birthday, the income stream distribution reverts to the client's spouse, and the spouse receives the property upon the death of the client. Examine the gift tax consequences of the transaction based on the use of the irrevocable trust, as compared to direct payments to the grandchildren.

• Per the text, gift tax-planning strategies can reduce tax for estate tax-planning purposes. Estate tax planning is very important for wealthy clients. Examine one tax-planning strategy that a CPA could use for lifetime giving that would reduce overall estate and gift taxes for a client.

Discussion: "Fairness of the Federal Estate Tax and Income and Principal in Fiduciary Accounting"

Please respond to the following:

• Per the text, several arguments exist for the repeal of the estate tax. From the e-Activity, defend the most significant argument advanced in the repeal of the estate tax by its opponents. Justify your response.

• The Uniform Principal and Income Act of 2000 (Uniform Act) allows the trustee to make adjustments between the principal and income accounts as necessary under certain requirements. Examine the major reasoning for allowing such transfers by the trustee and recommend alternatives to the allowance of the adjustments. Justify your response.

Assignment: Reorganizations and Consolidated Tax Returns

Suppose you are a CPA, and you have a corporate client that has been operating for several years. The company is considering expansion through reorganizations. The company currently has two subsidiaries acquired through Type B reorganizations. The client has asked you for tax advice on the benefit of a Type A, C, or D reorganization over a Type B reorganization. Additional facts regarding the issues are reflected below.

• The company currently files a consolidated income tax return with the two subsidiaries acquired through a Type B reorganization.
• ABC Corporation, a subsidiary targeted by the client for takeover, has substantial net operating losses.
• XYZ Corporation and BB Corporation will be acquired as subsidiaries in the next six months.

Use the Internet and Strayer databases to research the rules and income tax laws regarding Types A, B, C, and D reorganizations and consolidated tax returns. Be sure to use the six step tax research process and demonstrated in Appendix A of your textbook as a guide for your written response.

Write a four to six page paper in which you:

• Compare the long-term tax benefits and advantages of each type of reorganization, and recommend the type of reorganization that will be most beneficial to the client.

• Suggest the type of reorganization the client should use for the ABC Corporation based on your research. Justify the response.

• Propose a taxable acquisition structure for the client's planned acquisitions over a nontaxable reorganization. Assess the value of a taxable transaction over a nontaxable reorganization for the client.

• Examine the value and limitations of including the ABC Corporation if acquired as a wholly owned subsidiary in the consolidated return, and provide a recommendation to your client. Support the recommendation with applicable research.

• Create a scenario that will allow the client to reduce any disadvantages from filing a consolidated return as a member of a controlled group.

• Use the six step tax research process, located in Chapter 1 and demonstrated in Appendix A of the textbook, to record your research for communications to the client.

Your assignment must follow these formatting requirements:

• Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

• Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

• Prepare client, internal, and administrative documents that appropriately convey the results of tax research and planning.
• Evaluate tax-planning strategies related to liquidating distributions, acquisitions, and reorganizations.
• Create an approach to tax research that results in credible and current resources.
• Research and analyze tax issues regarding consolidated tax returns.
• Use technology and information resources to research issues in organizational tax research and planning.
• Write clearly and concisely about organizational tax research and planning using proper writing mechanics.