Assignment of Income Taxes and IRS Forms

Assignment of Income Taxes and IRS Forms

Instructions  

Assignment of Income Taxes and IRS Forms

You work at a mid-sized CPA firm as an accountant. Bob Jones is one of your clients. The following is Bob’s personal information: DATE OF BIRTH: 10 OCTOBER 1952 444-00-4444 (SSN) Relationship Status: Single 5100 Lakeshore Drive, Pensacola, FL 32502 (phone)

Bob owns and operates a highly profitable used vehicle dealership at 210 Ocean View Drive in Pensacola, Florida. You submitted a Schedule C for Bob with $1,200,000 in taxable income last year. Over the next several years, the company’s income will expand at a rate of 10% per year. Bob’s personal wealth is estimated to be around $14,000,000, which includes interests in land, equities, and bonds. He earned $20,000 in interest and $6,000 in dividends the previous year. The $14,000,000 includes $9,000,000 in land that Bob purchased for $450,000 in 1966. The stocks and bonds have a $1,200,000 tax basis and are currently valued at $5,000,000. The investments have all been owned for at least a year. In addition to his assets, Bob paid $140,000 in 1972 for his home, which is now valued at $600,000. The used car firm is currently valued at $53 million, including the value of the land and building, which is $41 million. Bob has a $2,000,000 and $400,000 tax basis in the land and building, respectively. The inventory is worth $12,000,000, with a cost basis of $10,000,000; the remaining assets, which include office furniture and equipment, account for the remaining value of the company. The furniture and equipment in the office have been fully depreciated. Bob wants your expert opinion on whether he should keep his firm as a sole proprietorship or change it to a partnership, a S corporation, or a C corporation. Bob wants to involve Mandy, his daughter, as an owner and manager in one of the business organizations he has chosen, with a possible 40 percent stake. One of his main anxieties is what will happen to his company after he dies. The following is Mandy’s personal tax information: Jones, Mandy SSN: 999-99-9999 DOB: 30 June 1990 Home Address: 5990 Langley Road, Pensacola, FL 35203 Marital Status: Single

Required:

F. Prepare a detailed tax planning strategy that explains how the client’s family can benefit from tax savings if the client dies. Cite all applicable laws and regulations.

G. Create a strategy plan that tackles the need for a will in the estate’s administration. In accordance with tax statutes and regulations, describe what happens to the business, land, and investments. Consider expanding the strategy to include the client’s estate tax, trust, and charity donations while minimizing estate tax.

H. Recommend estate planning options to reduce the taxable estate in accordance with tax statutes and regulations. In your response, make sure to mention giving property to heirs.

I. Describe the best course of action in the event that the client decides to leave the company in three years. Provide him with some guidance if he decides to give the business to his daughter or transfer the assets or common stock to her, depending on the type of business structure you’ve chosen.

J. Show the best course of action if the client wants to sell the company. Consider the tax implications of capital gains and losses, as well as ordinary income issues and the sale of an existing functioning corporation.

Make sure to credit your sources.

RUBRIC
Excellent Quality 95-100%	Introduction 45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.		Literature Support 91-84  points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.			Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score 50-85%	40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.		83-76  points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.			52-49  points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality 0-45%	37-1 points The background and/or significance are missing. No search history information is provided.		75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.			48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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