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Tax Representation Guidelines” Please respond to the following:

  • Compare the American Institute of CPAs’ (AICPA) Statements on Tax Standards (SSTS) and the Treasury Department Circular 230 rules to practice before the Internal Revenue Service (IRS). Suggest which document creates better guidance in the preparation of tax returns and written advice provided to taxpayers.
  • Imagine that you are a CPA, and there is a conflict in the Circular 230 and the SSTS. Identify the guidelines that you would use, and support your selection

“Interpreting Tax Research” Please respond to the following:

  • From the e-Activity, evaluate the importance of the principal issue litigated in the case in question, using the tax research steps outlined in Appendix A of your text.
  • From the e-Activity, give your opinion on the adequacy of the ruling in the case based on the Medicare guidelines, petitioners expensing policy, and the tax laws identified in the case.

Discussion 1″Transfers to Controlled Corporations” Please respond to the following:Create a scenario where the transfer of property to a controlled corporation under Section 351 of the Internal Revenue Code (IRC) results in the taxation to the transferor. Evaluate the fairness of the taxation of the transaction to the transferor. Provide a tax-planning strategy to prevent taxation of similar transfers.

Discussion 2

“Related Party Losses” Please respond to the following:

Section 267 of the IRC disallows a deduction on losses realized on the sale of property and a deduction for accrued expenses between a corporation and a controlling shareholder. GAAP does not include this disallowance provision. Create an argument for allowing a loss on a sales transaction between a controlled corporation and shareholder when the transaction includes an independent appraisal and the loss is similar to losses incurred in arm’s length transactions. Provide an example to support your argument.

week 3

Section 306 of the IRC was enacted by Congress to prevent tax avoidance by distributing certain stock to a shareholder in a nontaxable stock dividend. Section 306 prevents shareholders from using a preferred stock bailout to convert ordinary income into a capital gain. Analyze the key provisions of Section 306 of the IRC, and outline a tax- planning strategy geared toward redeeming preferred stock with sale or exchange treatment as an alternative to Section 306.

ACC565 Week 3 Discussion 2

Per the text, the personal holding company (PHC) tax penalizes taxpayers that enter into tax-motivated transactions designed to shelter passive income of closely held corporations from higher individual tax rates. Suppose you represent a professional athlete who is the majority owner of a corporation. The corporation has several personal service contracts with advertising agencies and endorsements for your client in addition to passive income. Propose a plan in which you eliminate the potential for the PHC tax on the client’s corporation.The same client provides significant information on passive income at the end of the year, creating a potential PHC tax liability. Outline a plan for the current year in which you reduce the total tax liability for the client and include a proposal for future years to prevent PHC tax liability.

week 4

“Corporate Liquidations” Please respond to the following:

From the e-Activity, evaluate the appropriateness of the techniques used and the common issues pursued by the IRS in corporate liquidations and dissolutions. Create an argument to defend the client if the IRS pursues the assignment of income doctrine or the clear reflection of income doctrine on a cash-basis corporation, as reflected in the Examining Officers Guide (EOG).

Outline a plan of liquidation for a client that liquidates two (2) years after incorporation by transferring loss property under IRC Section 351. The plan of liquidation should be defensible against the IRS in an audit that challenges the plan as having a tax-avoidance purpose. Analyze the consequences in an IRS audit of a subsequent reincorporation after a corporate liquidation and recognition of losses.

Discussion 2

“Taxable Acquisition Transactions and Nontaxable Reorganizations” Please respond to the following:

IRC Section 338 allows a deemed sale election generating immediate taxation to the target corporation and a stepped-up or stepped-down basis to the price paid by the acquiring corporation for the target corporation stock plus liabilities on the deemed sale. Examine at least one (1) benefit of a Section IRC 338 liquidation election for a target corporation. Create a situation which demonstrates a favorable Section IRC 338 liquidation election for a target corporation.

Identify one (1) consequence of a nontaxable reorganization, and offer an alternative to eliminate the negative effect of the identified consequence.

ACC565 WEEK 5 DISCUSSION 2“Consolidated Tax Returns” Please respond to the following:

  • Corporations P, S, and C are members of a parent-subsidiary controlled group filing a consolidated tax return. Corporations A and B are members of a brother-sister controlled group that cannot file a consolidated tax return. Design a strategy geared toward creating an affiliated group which makes Corporations A, B, P, S, and C all eligible to file a consolidated tax return.
  • Assess the adequacy of the schedule M-3 Part 1 in creating transparency between the consolidated financial statements and the consolidated tax returns of the corporations discussed in the first part of this discussion. Suggest at least two (2) modifications to the M-3 that you can use to identify possible issues the IRS would most likely examine on a consolidated tax return.

WEEK 6 DISCUSSION 1“Partnership Tax Year” Please respond to the following:

  • The IRC restricts the choices for a partnership‘s tax year to prevent the deferral of tax. This causes most partnerships to adopt a calendar year for tax reporting. From the e-Activity, create a scenario using a fiscal tax year which allows a partnership to defer taxes that meet the requirements of Sections 706 and 444 of the IRC.
  • Suggest at least one (1) major reason why Congress allowed the exception to the calendar year for partnership tax year elections.


“Limited Liability Partnerships” Please respond to the following:

  • As discussed in the text, large accounting firms and other professional firms operate as limited liability partnerships (LLPs). Contrast the LLP form of business under state laws to the LLP for tax purposes.
  • Suggest the major reasons why a new entity would choose a LLP over a traditional partnership for tax purposes.

week 7 Discussion 1

“Deductibility of S Corporation Losses and Deductions” Please respond to the following:Per the text and IRC, losses and deductions of an S corporation pass through to the shareholders of the corporation and are limited to the shareholders’ basis in the S corporation. Suggest a plan for a client to increase the deductible pass through loss and deductions over the initial investment from a new wholly owned S corporation.Analyze the major advantages and disadvantages of using the plan you created on tax planning in the first part of this discussion for future years.

Week 7 Discussion 2

“S Corporation Distributions and Taxation” Please respond to the following:

From the e-Activity, differentiate between the treatment of S corporation distributions from corporations having no earnings and profits, and corporations having accumulated earnings and profits. Suggest the most significant reason for the difference in the treatment of distributions. Justify your response.

week 8

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 (2) 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 (25) after completing college. The income from the trust is distributed directly to the grandchildren until they reach age twenty-five (25), if they do not attend college. When the grandchildren celebrate their twenty-fifth (25th) 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

From the e-Activity and the scenario from Part 1 of this discussion, create a tax strategy which ensures that gift tax is paid on the property prior to the death of the client and that the client may use the full benefit of the gift-splitting election.

Discussion 2

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 (1) tax-planning strategy that a CPA could use for lifetime giving that would reduce overall estate and gift taxes for a client.

week 9

“Fairness of the Federal Estate Tax” Please respond to the following:

  • Per the text, a voluntary compliance system is built on the fairness of the system. The federal estate tax is often referred to as a death tax on wealthy individuals. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 provided for periodic increases in the exemption amount for decedents who die after December 31, 2001, until the filing threshold reached $3.5 million in 2009. The tax was repealed in 2010 and later reinstated beginning in 2011. From the e-Activity, determine one (1) major factor contributing to the fairness of estate taxes on wealthy individuals prior to EGTRRA and the current structure of the federal estate tax.
  • 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.

Discussion 2

“Income and Principal in Fiduciary Accounting” Please respond to the following

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.

Create a scenario that demonstrates an adverse effect on the remainderman resulting from a transfer between principal and income by the trustee.

week 10

Imagine a situation in which a client under audit by the IRS omitted $100,000 in income. From the e-Activity, examine the major factors relative to the omission by the client that would result in a criminal investigation, rather than a civil fraud proposal by the IRS.

Evidence of FraudBased on the scenario in the first part of this discussion, suggest at least one (1) strategy that the client should use in defense of a criminal case pursued. Provide a rationale for your response.
Discussion 2

Per the text, a U.S. parent company does not include the income of a foreign subsidiary until the income is repatriated as dividends. Defend the creation of foreign subsidiaries as a mechanism to defer income of major U.S. companies. Propose a new tax law that will benefit the U.S. Treasury from the deferral of income from foreign subsidiaries and encourage the repatriation of the previously deferred income.


week 11

Discussion 1“Learning Experience” Please respond to the following:From the lessons and conceptual ideas presented in this course, determine the single most impactful or interesting lesson / concept you have learned. Provide a rationale for your response.

Assume you have the power to make reforms to the way tax research and planning is currently conducted. Propose the reforms you would make. Justify your response

Discussion 2

“Application of Knowledge” Please respond to the following:

Identify the content from this course that you believe will be the most useful to you in the future. Provide at least one (1) specific example to support your response.

Speculate on the most significant changes you expect to see in the tax code over the next five (5) years. Explain your reasoning.

  • Assignment 1: Client LetterImagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on the most advantageous capital structure of a new corporation. Your client formed the corporation in question to provide technology to the medical profession to facilitate compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your client is very excited because of the ability to secure several significant contracts with sufficient capital.3. Use the six (6) step tax research process, Provided below to record your research for communications to the client. Week 4 Assignment 2Assignment 2 :Constructive Dividends, Redemptions, and Related Party LossesSuppose you are a CPA hired to represent a client that is currently under examination by the IRS. The client is the president and 95% shareholder of a building supply sales and warehousing business. He also owns 50% of the stock of a construction company. The remaining 50% of the stock of the construction company is owned by the client’s son. The client has received a Notice of Proposed Adjustments (NPA) on three (3) significant issues related to the building supply business for the years under examination. The issues identified in the NPA are unreasonable compensation, stock redemptions, and a rental loss. Additional facts regarding the issues are reflected below:· Unreasonable compensation: The taxpayer receives a salary of $10 million composed of a $5 million base salary plus 5% of gross receipts not to exceed $5 million. The total gross receipts of the building supply business are $300 million. The NPA by the IRS disallows the salary based on 5% of gross receipts as a constructive dividend· Stock redemptions: During the audit period, the construction company redeemed 50% of the outstanding stock owned by the client and 50% of the stock owned by the client’s son, leaving each with the same ownership percentage of 50%. The redemption was treated as a distribution under Section 301 of the IRC by the IRS.· Rental loss: The rental loss results from a building leased to the construction company owned by the client and his son.Write a three page paper in which you:1. Based on your research and the facts stated in the scenario, prepare a recommendation for the client in which you advise either acceptance of the proposed adjustments or further appeal of the issue based on the potential for prevailing on appeal.

    2. Create a tax plan for the future redemption of the client’s stock owned in the construction company that will not be taxed according to Section 301 of the IRC.


    ACC565 Week 7 Assignment 3

    Assignment 3: Reorganizations and Consolidated Tax Returns

    Due Week 7 and worth 250 points

    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 (2) 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 (2) 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 (6) 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 (6) step tax research process in Chapter 1 and demonstrated in Appendix A of your textbook as a guide for your written response.

    Write a four to six (4-6) page paper in which you:

    1. 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.
    2. Suggest the type of reorganization the client should use for the ABC Corporation based on your research. Justify the response.
    3. 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.
    4. 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.
    5. Create a scenario that will allow the client to reduce any disadvantages from filing a consolidated return as a member of a controlled group.
    6. Use the six (6) 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.

    Assignment 4: Tax-Planning Client Letter on Irrevocable Trusts, Gift Tax, and Estate Tax

    Due Week 10 and worth 150 points

    Suppose you are a CPA, and your client has requested advice regarding establishing an irrevocable trust for his two (2) grandchildren. He wants the income from the trust paid to the children for 20 years and the principal distributed to the children at the end of 20 years.

    Use the Internet and Strayer databases to research the rules regarding irrevocable trusts, gift tax, and estate tax. Be sure to use the six (6) step tax research process in Chapter 1 and demonstrated in Appendix A of your textbook as a guide for your written response.

    Write a one to two (1-2) page letter in which you:

    1. Analyze the effect of an irrevocable trust on the gift tax and future estate taxes.
    2. Suggest other significant alternatives that the client could use both to reduce estate tax and to maximize potential advantages of the payment of gift taxes on transfers of property.
    3. Use the six (6) 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.

    Parent and Subsidiary Corporations have filed calendar-year consolidated tax returns for several years. Parent Corporation uses the cash method of


    the interest expense is deductible when accrued.
    the interest expense and interest income may be reported in different consolidated return years.
    the interest income is reported when the interest expense is accrued by Subsidiary.
    the interest expense deduction is taken when Parent reports the interest income.

    A consolidated return’s tax liability is owed by


    all group members in equal portions.
    the group member responsible for that portion of the tax liability.
    all group members who are severely liable.
    the parent corporation.

    Albert contributes a Sec. 1231 asset to a partnership on June 1 of this year in exchange for a 10% partnership interest. He had purchased the asset on March 1, 2002. His holding period for the partnership interest begins


    March 1, 2002.
    March 2, 2002.
    June 1 of the current year.
    June 2 of the current year.

    Meg and Abby are equal partners in the AM Partnership, which earns $40,000 ordinary income, $6,000 long-term capital gain (LTCG), and $2,000 Sec. 1231 loss during the current year. What is the amount and character of income that must be reported on Abby’s tax return for this year’s partnership operations?


    $20,000 ordinary income, $3,000 LTCG, $1,000 Sec. 1231 loss
    $19,000 ordinary income, $3,000 LTCG
    $23,000 ordinary income, $1,000 Sec. 1231 loss
    $22,000 ordinary income

    Allen contributed land, which was being held for sale to Allen’s customers, to a partnership in exchange for a 20% interest. The partnership uses the land in its business for three years and then sells the property. When the property was contributed, it had a basis in Allen’s hands of $500,000 and an FMV of $600,000. The partnership sells the land for $700,000. The gain reported by the partnership is


    $100,000 of ordinary income and $100,000 of Sec. 1231 gain.
    $100,000 of Sec. 1231 gain and $100,000 of capital gain.
    $200,000 of ordinary income.
    $200,000 of Sec. 1231 gain.

    The AB Partnership has a machine with an FMV of $25,000 and a basis of $20,000. The partnership has taken an $8,000 depreciation on the machine. The unrealized receivable related to the machine is



    The definition of “inventory” for purposes of Sec. 751 includes


    land held for investment.
    marketable securities not held by dealers.
    depreciation recapture potential on Sec. 1231 assets.

    accounting while Subsidiary Corporation uses the accrual method of accounting.


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