Assignment
The final assignment for this class is the Final Project. Its purpose is for you to demonstrate an overall mastery of the techniques used in, and knowledge of, tax research covered in this class. You will be given the description of a fact pattern and will be asked to research the Internal Revenue Code and regulations to find the answers to the question at hand. After finishing your research, you will write a memo to the client documenting your research and your conclusions based on your findings. You must cite the Internal Revenue Service (IRS) tax code that supports your recommendations.
Fact pattern:
Your client, Lena Smith, writes you and asks you to assist her in understanding her filing obligations surrounding the video business that she started during the last tax year, for which she thinks she has a filing obligation. She wants to make travel videos. It's early and she doesn't have much income yet, but she believes it may take off few years from now when she builds the library of content and starts licensing it to various studios and production companies.
Below are her income and expenses that she hopes to include on her tax return:
• Non-photography income from her full-time banking job for which she gets a W-2 form for $75,000
• Video equipment she purchased for $15,000
• Equipment insurance premium of $500
• Various magazine subscriptions she purchased for $1,000
• Travel supplies (suitcases and such) she purchased for $500
• Travel expenses of $15,000 for photography trips she took to Asia to build content
• Part of the mortgage associated with where she setup her video studio for $1,500
Lena is thinking of filing as a sole proprietor. For the purposes of this assignment, please ignore any sales and state income tax filing obligations. Remember, you must cite the IRS tax code that supports your recommendations.
She has the following outstanding questions she hopes you can answer:
a. Out of all the expenses of the business she listed to you, which ones will she be able to deduct on her tax return?
b. Out of the expenses she will deduct, will she be able to deduct the full amount on that tax return?
The Final Project
• Must be four to five pages in length, single spaced, and formatted in the form of a client memo as described in chapter 7.
• Must include a title page with the following:
o Title of paper
o Student's name
o Course name and number
o Instructor's name
o Date submitted
• Must address all the questions the client asked with critical thought supported by research findings from primary sources.
• Must cite at least five primary sources to support the conclusions.
• Must cite all tax references using the format described in the required reading for the course.