ACC 565 Week 7 Assignment 3 Reorganizations and Consolidated Tax contains ( 2 Papers )
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· 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 . 3 . Propose a strategy for the client to receive similar amounts in compensation in the future and avoid the taxation as a constructive dividend . 4 . Use the six ( 6 ) step tax research process to record your research for communications to the client . Use the Internet and 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 . ===============================================
ACC 565 Week 7 Assignment 3 Reorganizations and Consolidated Tax contains ( 2 Papers )
For more course tutorials visit