Write a Memorandum: A. Use logical reasoning based on your tax research to explain why the client
Question:
Write a Memorandum:
A. Use logical reasoning based on your tax research to explain why the client should choose your recommended business entity.
B. Defend your business entity recommendation by describing the accounting method. Consider the advantages and disadvantages of the business entity based on the following:
1. Cash basis vs. accrual
2. The cost to prep the returns
3. The tax benefits
4. The limited liability protection
5. Employee benefits
C. Interpret the tax law pertaining to the type of business recommended and justifies your recommendation using details consistent with tax law, code, and regulations.
D. Explain the tax effect based on providing $180,000 per year for the client’s salary and $70,000 per year for his daughter’s salary if they withdraw cash from the business or pay dividends as appropriate.
E. Justify the percentage of ownership the client’s daughter should have in the business based on the type of business entity recommended.
Consider the tax law in reference to the recommendation and how the decision will affect the daughter’s tax return.
F. Create a detailed tax planning proposal explaining how the client’s family can experience tax savings should the client pass away. Cite relevant governing rules and regulations.
G. Illustrate a strategic plan that addresses the need for a will in handling the estate. Detail what happens to the business, land, and investments consistent with tax codes and regulations. Consider extending the plan to address the client’s estate tax, trust, and charitable contributions while minimizing estate tax.
H. Recommend estate planning strategies consistent with tax codes and regulations for the purpose of reducing the taxable estate. Be sure to include gifting property to heirs in your response.
I. Illustrate the best course of action if the client decides to leave the business in three years. Provide some advice to him should he decide to gift the business to his daughter or transfer the assets or common stock to her, depending on the business entity you have selected.
J. Illustrate the best course of action if the client wishes to sell the business. Consider the tax consequences with regard to capital gains and losses, ordinary income issues, and selling an existing operating business.
Expert Answer:
Memorandum To From Subject Tax Benefits and Liability for S Corporations Date Based on the type and nature of the business of offering services it is recommendable for Bob to form S corporation S corp... View the full answer
