Our papers are 100% unique and written following academic standards and provided requirements. Get perfect grades by consistently using our writing services. Place your order and get a quality paper today. Rely on us and be on schedule! With our help, you'll never have to worry about deadlines again. Take advantage of our current 20% discount by using the coupon code GET20
Order a Similar Paper Order a Different Paper
Suppose 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 client’s son owns the
remaining 50% of the stock of the construction company. 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:
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.
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 IRS treated the redemption as a distribution under
Section 301 of the IRC.
loss: The rental loss results from a building leased to the construction
company owned by the client and his son.
Use the Internet and Strayer databases to research
the rules and income tax laws regarding unreasonable compensation, stock
redemptions treated as dividends and related party losses. 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 three to four (3-4) page paper in which you:
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.
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
a strategy for the client to receive similar amounts in compensation in
the future and avoid the taxation as a constructive dividend.
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
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
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
The specific course learning outcomes associated
with this assignment are:
tax issues regarding corporate formations, capital structures, income
tax, non-liquidating distributions, or other corporate levies.
client, internal, and administrative documents that appropriately convey
the results of tax research and planning.
an approach to tax research that results in credible and current
technology and information resources to research issues in organizational
tax research and planning.
clearly and concisely about organizational tax research and planning
using proper writing mechanics.