TAX RESEARCH MEMO: BUSINESS PURPOSE ASSIGNMENT INSTRUCTIONSOVERVIEWFor this assignment, you will be submitting a tax research memo regarding the scenario detailed below. The purpose of this assignment is for you to research the proper method for calculating deferred tax assets and liabilities.
INSTRUCTIONSThe memo should be submitted in the form of a Microsoft Word document, using only the template provided, and labeled as follows: lastname_memo codification.doc. The Relevant Facts, Specific Issues, and Conclusions sections of the memo should be thorough but concise. The key portion of the memo will be the Support section, which should be properly supported by appropriate regulation citations (be specific with section, number, paragraph, and subparagraph as applicable).
As this is a memo, and not a formal writing assignment, current edition APA format is not required. Furthermore, there is no need to submit a title page or research page. Just substitute “Your Firm” at the top of the memo with your full name.
Prepare (in good form) a research memorandum to the file.
SCENARIO: Chris and Sue are 50 percent shareholders in the BackBone personal service corporation. BackBone provides chiropractice services in four small towns: Troy, Union, Vista, and willow. Chris is the main chiropractor in the Troy office, and Sue heads the Vista office. The two other offices have chiropractor employees running the practices, but that is where BackBone’s trouble lies. Charlie, the main chiropractor in the Willow office does not see eye-to-eye with Chris and Sue on management styles. Charlies does not take well to any interference in how he runs the office, the hours he keeps, or the therapy techniques he employs. Firing Charlies is not an option for two reasons. First, it is difficult to find chiropractors who want to work and live in small towns. Second, and most important, if Charlie were to leave BackBone, he would start his own practice in Willow. He is very good with patients and easily would be able to take at least 80 percent of the clients in Willow. Sue and Chris have noticed that some of the patients in Union drive to Willow because they prefer Charlies to Joe, the chiropractor in their Union office. Chris and Sue do not want to compete with Charlie and would prefer that the practice come up with an arrangement that would make everyone happy. They already pay Charlie handsomely. So more salary is not the solution. For Charlies, it seems to be a matter of control. Chris and Sue may be willing to give up control of the Willow office, but they do not want to completely lose the profits this office adds to BackBone. Chris and Sue have come to you for some suggestions on how to solve this problem with the lowest tax cost. Provide BackBone with several options and the tax consequences of each. Support your conclusions with primary citations. Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.
TAX RESEARCH MEMO: BUSINESS PURPOSE ASSIGNMENT INSTRUCTIONS OVERVIEW For this assignment, you will be submitting a tax research memo regarding the scenario detailed below. The purpose of this assignm
ACCT 612 Tax Research Memo Template Your Firm Your Town and State Date Relevant Facts Phyllis is the owner of the ABC Individual Retirement Account (IRA). However, on February 11th, the present year, Phyllis requested asked for a check for the IRA balance on the account she opened at ABC firm. She received the check that had been issued in her name. She rolls over the check in a new IRA account at another brokerage firm XYZ after getting it on the day she requested it. The same year, on May 8th, Phyllis asked for a check in her IRA, which she had rolled over the prior check into. Thirty-five days later, she placed the check into yet another IRA account in the same year. Specific Issues Is Phyllis’s May 8 distribution taxable? Conclusions Phyllis’ transaction is a rollover since she withdraws cash from one qualified retirement plan and contributes it to another within 60 days. Unless the rollover is to a Roth IRA or designated Roth account, rollovers are not taxed. Regardless of the amount of IRA accounts maintained, an individual can only make one rollover from an IRA in any given year (Cymbal, & Barrett, 2016). As a result, Phyllis’ rollover on May 8th is taxable because the IRA rollover was completed in the same year it was deposited. Support The initial rollover from the ABC firm’s IRA account to the XYZ firm’s IRA account was not to be included in taxable income because Phyllis deposited the check within 60 days, and it was a single rollover to an IRA account. The May 8th rollover occurred three months after the initial rollover. According Cymbal, & Barrett, (2016) “Section 408(d) (3) (B) of the Internal Revenue Code limits taxpayers to one IRA-to-IRA rollover every 12 months”, as proposed regulation section “1.408-4(b)-(4) clarifies (ii)” (Cymbal, & Barrett, 2016). Phyllis made her transfer three months after the first rollover, and as a result, she may be liable to a 10% early withdrawal tax on the balance included in her taxable income. Cymbal, K. M., & Barrett, T. (2016). Increasing the Odds of Making a Successful Roth IRA Conversion. Journal of Financial Service Professionals, 70(3). Actions to Be Taken ________ Discuss with client. Date discussed ________ ________ Prepare a memo or letter to the client ________ Explore other fact situations ________ Other action. Describe:___________________________ _______________________________________________________ Preparer ________ Reviewer ________ Partner ________