ACC 565 Week 4 Assignment 2 Constructive Dividends , Redemptions , and Related Party Losses ( 2 Papers )
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ACC 565 Week 4 Assignment 2 Constructive Dividends , Redemptions , and Related Party Losses ( 2 Papers )
For more course tutorials visit www . tutorialrank . com
This Tutorial contains 2 Different Papers
This paper of ACC 565 Week 4 Assignment 2
Assignment 2 : Constructive Dividends , Redemptions , and Related Party Losses
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 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