You will submit IRS draft tax forms, analyzing all of the critical elements in III. Appendix, sections A, B, and C. Based on your research, the tax forms and schedules will support your recommendation to the client. Submit this assignment as completed tax forms.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Recommend an appropriate business tax entity based on the analysis of a tax situation for achieving favorable economic impact on the client’s taxable income
Utilize appropriate tax forms and schedules that compute taxable income on individual tax returns and reflect versatility of thought, resulting in the best economic solution for the individual taxpayer
Apply accrual and cash basis accounting best practices and moral reasoning in determining when business transactions may be reported for income tax purposes
Assess the economic impact on taxable income for the business tax entity in relation to Internal Revenue Code and Treasury regulations and the optimum desired outcomes for the client
Evaluate the tax consequences that result from sales or distributions of property for their compliance with IRS Circular 230, Internal Revenue Code, and the American Institute for Certified Public Accountants and for advising the client
TAX 650 Final Project Guidelines and Rubric Overview The final project for this course is the creation of a memorandum with appendix. As an associate working in a privately held enterprise or working with privately held clients, it is imperative to be able to advise clients on the tax implications of their financial investments. The ability to model the tax consequences of transactions and do cost benefit analysis is crucial. For your final project, you will model the role of an associate working in a private consulting firm. You will demonstrate your ability to advise clients on whether they should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. Additionally, using your tax research skills and understanding of federal income taxation, you will have the opportunity to evaluate tax consequences from sales and distributions for their compliance with the Internal Revenue Code and Treasury regulations. The use of appropriate tax authority research is expected throughout the assignment, as its use is required by the Internal Revenue Service (IRS). The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, Seven, and Eight. The final product will be submitted in Module Nine. In this assignment, you will demonstrate your mastery of the following course outcomes: Recommend an appropriate business tax entity based on the analysis of a tax situation for achieving favorable economic impact on the client’s taxable income Utilize appropriate tax forms and schedules that compute taxable income on individual tax returns and reflect versatility of thought, resulting in the best economic solution for the individual taxpayer Apply accrual and cash basis accounting best practices and moral reasoning in determining when business transactions may be reported for income tax purposes Assess the economic impact on taxable income for the business tax entity in relation to Internal Revenue Code and Treasury regulations and the optimum desired outcomes for the client Evaluate the tax consequences that result from sales or distributions of property for their compliance with IRS Circular 230, Internal Revenue Code, and the American Institute for Certified Public Accountants and for advising the client Prompt You are currently working at a mid-sized certified public accounting firm. Your client is Bob Jones. Bob has hired your firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. Using the supplied Data Sheet for Final Project document, prepare a memorandum to the client recommending a type of business entity, including an appendix of supporting IRS tax schedules and forms. Specifically, the following critical elements must be addressed: I. Recommendation A. Recommend a type of business entity for the client to consider based on your tax research. Consider justifying your recommendation using the code and regulations that relate to the business entity. B. Differentiate between accrual accounting and cash basis. Based on the type of business and the client’s accounting system, what is the impact when revenue is recognized? C. Based on the decision of accrual vs. cash basis, describe when revenue would be recognized on the sale of inventory, and how the accrual reporting differs from cash basis. D. Determine the economic impact on the client’s financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate Internal Revenue Code and Treasury regulations. E. Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, broker’s fees, closing costs, appraisals, and surveys and the correct schedule form to complete. F. Justify whether or not the client should choose a business entity that has limited liability protection. Be sure to include possible future liability issues based on the potential economic impact and appropriate Internal Revenue Code and Treasury regulations. G. Describe the tax effect on the recommended business entity and the impact it will have on the client’s personal tax return. Consider addressing how the business entity affects the completion of the 1040 tax form. II. Conclusion A. Evaluate the economic impact on the client’s personal returns based on the recommended entity. Justify why the client would not choose the other business entities by informing the client of the differences. B. Justify your recommendation regarding the client’s daughter having an ownership interest. Provide details supporting the recommendation taking into consideration the jargon and mechanics of the transaction. C. Summarize cash or accrual basis accounting systems in relation to the selected business entity. Consider how the accounting system impacts revenue recognition consistent with Internal Revenue Code and Treasury regulations. D. Describe the after tax effects on the client’s cash flow based on the sale of the land that is needed to provide the funds necessary to start the business. Consider including capital gains tax rules. E. Explain whether or not the client and his child should take a salary or cash distribution according to tax purposes and Internal Revenue Code and Treasury regulations. Consider the type of business and the tax effect whether it is salary, dividends, or cash withdrawal. III. Appendix Based on your recommendation to the client regarding proprietorship, taxable income, and sale of land, complete the appropriate tax schedules and forms described below. A. Prepare the appropriate schedule(s) and tax form(s) for the recommended business entity. https://learn.snhu.edu/d2l/lor/viewer/view.d2l?ou=6606&loIdentId=23678 B. Prepare the appropriate pages of Form 1040 including all relevant tax schedules and forms to reflect taxable income based on your calculations and the disposition of assets. C. Illustrate how creative problem solving and versatility of thought impact professional advice that you intended to result in the best economic solutions for the client. Consider providing real-world examples to support your claims. Milestones Milestone One: Gross Income and Capital Gains In Module Three, you will submit a draft of the gross income and capital gains, analyzing the following critical elements: I. Recommendation, Section E, and II. Conclusion, Sections D and E. You must compute the property disposition capital gain and taxation of gross income. In completing this assignment, consider the tax effect of salary dividends or cash withdrawal in accordance with Internal Revenue Code and Treasury regulations. This assignment will be submitted as a Word document. This milestone is graded with the Milestone One Rubric. Milestone Two: Revenue Recognition and Accounting Methods In Module Five, you will submit a draft of the revenue recognition and accounting methods, summarizing the following critical elements: I. Recommendation, Sections B, C, and D, and II. Conclusion, Section C. You will determine revenue recognition and the economic impact of the client’s financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate Internal Revenue Code and Treasury regulations. This assignment will be submitted as a Word document. This milestone is graded with the Milestone Two Rubric. Milestone Three: Choice of Business Entity In Module Seven, you will submit a draft of the choice of business entity, analyzing the following critical elements: I. Recommendation, Sections A, F, and G, and II. Conclusion, Sections A and B. The short paper will communicate tax aspects of business entities to the client. This assignment will be submitted as a Word document. This milestone is graded with the Milestone Three Rubric. Milestone Four: Tax Forms In Module Eight, you will submit IRS draft tax forms, analyzing all of the critical elements in III. Appendix, sections A, B, and C. Based on your research, the tax forms and schedules will support your recommendation to the client. This assignment will be submitted as completed tax forms, which are provided to you in your textbook resource CD or on the IRS website. This milestone is graded with the Milestone Four Rubric. Final Submission: Memorandum With Appendix In Module Nine, you will submit a memorandum to the client, including an appendix with all IRS tax forms and schedules necessary to support your advice. It should be a complete, polished artifact containing all of the critical elements of the final project. It should reflect the incorporation of feedback gained throughout the course. This submission is graded with the Final Project Rubric. Deliverables Milestone Deliverable Module Due Grading One Gross Income and Capital Gains Three Graded separately; Milestone One Rubric Two Revenue Recognition and Accounting Methods Five Graded separately; Milestone Two Rubric Three Choice of Business Entity Seven Graded separately; Milestone Three Rubric Four Tax Forms Eight Graded separately; Milestone Four Rubric Final Submission: Memorandum With Appendix Nine Graded separately; Final Project Rubric Final Project Rubric Guidelines for Submission: Your memorandum must be a 7- to 10-page Word document (plus a cover page and reference page). Inline (parenthetical) references and the Reference page must be written in APA format. Use double spacing, 12-point Times New Roman font, and one-inch margins. Your memorandum must include an appendix containing electronic PDF versions of the appropriate tax forms and schedules. View the article How to Insert a PDF Into Word on PC or Mac for a tutorial on how to embed PDF documents into Word. Critical Elements Exemplary Proficient Needs Improvement Not Evident Value Recommendation: Business Entity Meets “Proficient” criteria and details are justified using appropriate Internal Revenue Code and Treasury regulations relevant to recommended business entity (100%) Recommends a type of business entity for the client to consider that is based on tax research (90%) Recommends a type of business entity but either the cited Internal Revenue Code and Treasury regulations are inaccurate or details are cursory (70%) Does not recommend a type of business entity (0%) 6.4 Recommendation: Accrual Accounting vs. Cash Basis Meets “Proficient” criteria and provides a full description of which entities require accrual and when it is optional (100%) Differentiates between accrual accounting and cash basis and identifies the impact of the revenue (90%) Differentiates between accrual accounting and cash basis and identifies the