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week 1

Discuss some of your initial apprehensions surrounding working with your CLC team and client Dave Novell throughout the course. Upon review of the case, what predictions can you make concerning the outcome of the case as it relates to Dave, his businesses, and family situation? What suggestions and/or resources can you offer your classmates for collaborating and completing the case study reports in a professional manner?

grand canyon

diss 2

A taxpayer uses borrowed funds to acquire nondividend-paying corporate stock. Note that interest on borrowed funds may be deducted in the period paid, up to the amount of net investment income from other stocks or investments (that is, interest and dividend income). Discuss the tax consequences of this plan and support your response by referencing a relevant reading and/or other supplemental material.

week 2

What background information provided in the case seems to be the most pertinent to Dave's tax liability and ability to apply tax planning strategies in the most effective manner? Evaluate the documents left by the deceased tax preparer on their ability to complicate or improve Dave's tax liability and/or personal/business circumstances. Support your response by referencing a relevant reading and/or other supplemental material.

Under what circumstances is an investment, taxed each period at capital gains rates, preferred to an SPDA contract (taxed at ordinary rates on investment income but only at the point of liquidation)? When is Savings Vehicle IV (income deferred and taxed at capital gains rates at the point of liquidation) preferred to an SPDA? Support your response by providing a specific example in each circumstance.

week 3

Provide at least two resources you have found to be useful in analyzing the case study thus far. Explain how you use the resource and why it is important.

In determining the tax advantage of a current salary contract versus a deferred-compensation contract, why is it useful to set the contractual terms so as to hold one party indifferent to the choice of the contract? Does it matter whether the employee or employer is made indifferent between the two choices? Explain your reasoning and support your response by referencing a relevant reading and/or other supplemental material.

week 4

Discuss recent developments in the case study, which seem to pose the most challenges for you and your CLC team in terms of providing Dave with highest level of service in terms of his personal and business needs.

When a corporation repurchases shares of its stock from investors, do individual shareholders generally prefer the repurchase to be treated as a dividend for tax purposes or do they prefer it to be treated as a sale? What do corporate shareholders prefer? Why? Explain your reasoning and support your response by referencing a relevant reading and/or other supplemental material.

week 5

As a financial analyst or tax planner, how would you determine whether a potential target firm's goodwill was tax-based goodwill (deductible)? Explain your reasoning and support your response by referencing a relevant reading or providing a specific example.

Under what general circumstances is a taxable acquisition structure preferable? Consider specifically the tax attributes and tax status of the target corporation and the target's shareholders. Also consider the tax preferences and nontax circumstances of the acquiring corporation. Provide a specific example to substantiate your response.

week 6

Apart from the exclusion equivalent, should tax planners recommend that all estate assets be transferred to the surviving spouse if the goal is to transfer resources to successive generations? What nontax issues arise in the planning problem?

Under what circumstances is it more tax advantageous to give to charity during your lifetime rather than on bequest? What nontax factors might influence your decision?

week 7

Why do countries with worldwide tax systems give foreign tax credits? Provide an example of the business implications for two different countries as it relates to doing business with the United States.

Consider a wealthy U.S. citizen that earns $1.3 million per year in dividends and capital gains from her portfolio of U.S. stocks. Can she legally avoid having this income subject to U.S. tax laws by forming an offshore holding company and having the holding company own the stock? She has her holding company reinvest the dividends and capital gains, so she personally receives no cash from her investments. Explain your reasoning and support your response by referencing a relevant reading and/or other supplemental material.

wee 8

Reflect upon your experience throughout the course. Share some challenges you and your team had as well as some successes. How has this experience better prepared you to work as an accountant and/or tax or financial advisor? To collaborate and work effectively with others? What areas or concepts studied throughout the course would you say you need the most developing in? What areas are you strongest in? What advice would you give to a new student taking this course?

Tax Planning and Business Strategy Case Study

Case Guidelines

Throughout the case, you may assume that events described unfold over a period of several years, as your client, Dave Novell progresses through life and each module is viewed as a different point in his life, in which his business and private affairs change and evolve. Your task is to assume the role of an accountant and member of an accounting team at a local firm assigned to work with Dave and apply your understanding of tax strategies and regulations to address and resolve issues concerning his tax obligations and liabilities.

Background Information

Dave Novell is a divorced parent with custody of his two children. Dave is an owner-employee with “On-Off-Shore Searchers, LLC” (OOSS). He and his children reside in Phoenix, AZ. When they were young, his children lived with their mother, even though he provided over 50% of their support. OOSS is a Louisiana registered LLC and based in Houma, Louisiana. It operates six drilling rigs now. Adam works a regular 2-weeks-onshore and 2-weeks-offshore schedule.

His prior tax preparer and advisor died unexpectedly. Unfortunately, the tax preparer was a sole practitioner and there was no one to continue the tax services to Dave. His stockbroker recommended you and your accounting firm to advise him and his family on his tax obligations and liabilities.

During the onshore weeks, Dave also manages a small business in Phoenix operating under the name of “Diamond Discovery,” a 100% owned small business that develops new musical talents. He operates this currently as a regular Schedule C business. You discover that his ex-wife, Diane, works in this business, he paid for the completion of her education in addition to paying for her house, in which she and the two children previously resided, and he has done this for many years. Once she had completed her education and had become employed, the divorce settlement required the house to be sold and the proceeds, net of the loan payoff, to be divided equally between the two individuals. This has not been done.

Documents Left by the Deceased Tax Preparer Contain the Following Information:

· On prior tax returns, he has deducted his mileage round-trip between Phoenix and Houma as a nonreimbursed business expense.

· Diane does not receive a W-2 or a Form 1099-Miscellaneous for the weekly cash stipend of $500 received from Diamond Discovery, Inc.

· Dave is vague as to if and how the stipend was handled by the deceased tax preparer.

· A review of prior tax returns does not reveal any information about this issue. However, Dave claims that he has always deducted it.

· Dave had converted Diamond Discovery to a corporate structure on November 20 of the prior year. However, the prior year returns provided by him consisted only of Dave’s 1040.

· Dave claims that Diamond Discovery was to be established as an S-Corp. with him as 100% owner. No records from the deceased tax preparer files show this was filed.

· W-2 from OOSS has the following:

o Gross, Box 1, Income, $125,000.

o Federal income tax withheld, Box 2, $21,300

o Social Security Income, Box 3, $106,800

o Medicare Income, Box 5, $125,000

o All Social Security and Medicare taxes were withheld

o Arizona income, $125,000

o Arizona withholding, $5,250

CLC Case Study Report A

Upon being retained by Dave to provide tax advice you are scheduled to meet with him in one week. The tax partner-in-charge assembles several staff members (CLC Team) and begins the task of understanding Dave’s tax situation. Dave is to be provided a summary of his current tax issues and at least three alternative plans to address these issues before tax returns need to be completed for his current tax year. During the first session Dave expects to be provided with an analysis of his individual tax situation, tax structure, and potential tax liability issues.

Please refer to the assignment grading rubric at the assignment’s drop box for information regarding how the assignment will be graded. The CLC team is to prepare a two-page (double-spaced) report with the required information to be submitted by the end of Module 2.

Individual Case Study Report A

As a member of the staff (CLC) team assigned to work with Dave, you are assigned the individual task of developing a summary of the legal restrictions placed on the client, the areas of tax planning that you recommend for the taxpayer, and what sources of interpretation of tax laws, regulations, and rules (search audit trail to be included as citations and references) should be used by the staff (CLC) team.

Additional information provided by Dave during a previous meeting included the following:

a) Dave is under a full investigation by the Internal Revenue Service for failure to file tax returns for a former company, Tucson to Texas Travelers (3T), a sole proprietorship, which ran a series of truck stops between Tucson, AZ and Houston, TX until it was closed down due to net losses for the last 4 years of the 7 years it was in operation.

b) A document produced by Dave indicates that the former tax preparer had rolled over a net operating loss (NOL) into the last 4 years of tax returns prepared for the client.

c) You discover a handwritten note in the files provided that the NOL was used to offset taxable income in other business ventures for the taxpayer in each of the last four years of returns prepared for the taxpayer.

d) A single piece of paper was discovered in the prior tax preparers file that reveals that 3T had not prepared and submitted payroll reports including W-2s and 2099s for its last 3 years.

You are to work independently of the CLC Team, but use the CLC report being developed for Module 1 with the anticipation that your additional work will be merged with that of other staff (CLC) members later.

Please refer to the assignment grading rubric at the assignment’s drop box for information regarding how the assignment will be graded. Prepare a two- to three-page (double-spaced) report with the required information to be submitted by the end of Module 2.

CLC Case Study Report B

The entire staff assigned to work with Dave (CLC Team) reassembles and are brought up-to-date by the tax partner. You learn that Dave has acquired controlling partner interest in OOSS’s second largest competitor, Deepwater Exploration, LLC, (DE) by purchasing $200 million of common stock using OOSS assets as collateral for a loan with First Trust Bank. After being appointed the new general manager of DE, he is considering merging OOSS and DE into a single company. Dave requests advice on what is the best business structure and why as it relates to the

compensation structure of DE and perhaps OOSS. He also wants to know the impact of different business forms of organization on the compensation of owners.

The staff team (CLC team) is now assigned the task of developing a recommendation summary of these issues and which is the best organizational structure to recommend for Dave and his companies. Dave indicated that even Diamond Discovery should be considered a part of his reorganization efforts.

Individual Case Study Report B

As a member of the staff (CLC) team assigned to work with Dave, you are assigned the individual task of developing a summary of the issues related to Dave after being in a meeting with the tax partner-in-charge.

During the latest meeting, you learned that Dave has remarried. His new spouse owns Dollar Max, Inc., and Dave has agreed to invest in Dollar Max. Dollar Max is an S-Corporation for tax purposes. Dave’s contribution consists of personal assets valued at $7,500,000. He requests information about the special tax rules that will apply to a corporation; information on what are the possible tax benefits of leverage in the corporation’s capital structure; whether or not some hybrid of debt-equity should be used; a summary of tax treatments of corporate distributions; and what would happen if they decided to liquidate her corporation with the plan to merge her operations assets into one of his companies; and whether or not a merger could be done tax free especially if an S Corporation structure was to be used.

You are to work independently of the CLC Team but use the CLC report being developed for Module Three with the anticipation that your work will be merged with that of other staff members.

CLC Case Study Report C

The staff (CLC) team assigned to work with Dave was notified in a weekly meeting by the tax partner-in-charge that Dave is in negotiations with the owners of Rough Timber Corporation (RTC) to acquire that business. RTC owns approximately 2,000,000 acres of timber throughout the U.S. and leases another 5,000,000 in the U.S. and Canada. Dave wants to know the best approach to minimize the tax liability for the acquisition for him and the other owners. The other owners are his brother and sister. He wants to make this a tax-free acquisition of their C Corporation if possible. If not, then he needs recommendations on the best way to minimize the tax liability.

The staff team (CLC team) is now assigned the task of developing a recommendation summary of these issues and which is the best organizational structure to recommend for Dave and his companies.

Individual Case Study C

As a member of the staff (CLC) team assigned to work with Dave you are assigned the individual task of developing a summary of the legal restrictions placed on the client, the areas of tax planning that should provide the taxpayer with the services needed, and what sources of tax law should be used by the staff team.

Dave has informed the tax partner-in-charge that he plans to bring his wife, children, brother and sister into the operation and ownership of his businesses. He expresses a desire to begin at the end of the current tax year to make gifts to his children of cash and ownership interests.

You are to work independently of the CLC Team but use the CLC report being developed for Module Five with the anticipation that your work will be merged with that of other staff members.

CLC Case Study Report D

The tax partner-in-charge provides additional information regarding Taxpayer Dave and his family-owned businesses. A grandchild has now entered the business after completion of his college studies. He recently married a citizen of another country.

Dave needs advice as to how this new family layer will affect the tax situation of the family-owned and -operated businesses. He also wants to know if there are any tax issues related to relocating some of his business efforts to another country, operating in multiple countries, or operating a business independently in another country. The tax partner-in-charge believes that Dave plans to turn over some of the business operations to his grandchild, who has expressed a desire to live in another country.

The staff team (CLC team) is now assigned the task of developing a recommendation summary of these issues and what is the best organizational structure for Dave and his family.

Please refer to the assignment grading rubric at the assignment’s drop box for information regarding how the assignment will be graded. The CLC team is to prepare a final four- to five-page (double-spaced) report with the required information to be submitted by the end of Module 8.

Individual PowerPoint Presentation

Dave, as the senior family member-owner of a variety of businesses, has requested from the tax partner-in-charge a presentation and summary of the issues and recommendations provided to him. He would like this in a PowerPoint slide presentation to be used at a family-business retreat being planned to review the businesses owned and operated by the expanding family. Of specific interest to family members is the strategic tax planning issues faced by the family.

You are to prepare a PowerPoint presentation with the required information to be submitted by the end of Module 8.

NR 439 Week 3 Research Database Assignment Form

Friday 29 December 2017