9-2 project

TAX 660 Final Project Guidelines and Rubric.
Overview
Working as an accounting associate in a financial organization requires the ability to apply tax and accounting knowledge in unique ways. Being able to identify issues and communicate them effectively to team members and clients is essential for any financial career working in a privately held enterprise or working with privately held clients. The final project for this course involves researching relevant tax code and creating of a set of memorandums to advise a hypothetical group of individuals; you will organize, operate, and ultimately restructure a merchandising business.
In the final project, you will demonstrate your ability to communicate your effective investment and business strategy recommendations to your client. Your proposed strategy could save the client millions of dollars over time, so it is imperative that you utilize your tax research skills and maintain compliance with all governing rules and regulations.
The project is divided into three 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 Four, Six, and Seven. The comprehensive set of memorandums will be submitted in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
 TAX-660-01: Evaluate tax consequences related to various elements of business formation for advising stakeholders on the most advantageous organizational structure
 TAX-660-02: Determine appropriate tax strategies associated with operating a multijurisdictional business for advising stakeholders on merchandising methodologies
 TAX-660-03: Assess the tax costs and benefits associated with restructuring a business to recommend appropriate tax strategies based on relevant tax law
 TAX-660-04: Propose effective strategies in estate planning for maximizing the tax benefit of stakeholders  TAX-660-05: Communicate key considerations to stakeholders for use in making sound tax-oriented business decisions based on chosen strategy.
Prompt
You will assume the role of tax advisor for a company made up of four stakeholders. In this case study, each stakeholder brings different assets and tax situations to the table. You must design the appropriate business structure for the company as a startup, advise tax solutions when the business is in operation, and counsel a tax strategy for each stakeholder during a restructuring. Your advice will be communicated in a series of memorandums for each scenario. Read the full narrative of the scenarios, which will be addressed separately in the milestones.
Specifically, the following critical elements must be addressed:
I. Establishing the Business:
A. Explain the general tax advantages and disadvantages of each form of business. Include a discussion of how each business form addresses owner concerns related to personal liability, return on investment, and tax costs related to compensation. [TAX-660-01]
B. Justify your choice of form of business entity for this venture based on stakeholder requirements for maximizing tax outcomes of business owners. Determine tax implications for your investors related to various investment options, including calculating the tax benefits/costs and identifying relevant tax law, code, and regulations. [TAX-660-01]
C. Make a recommendation for the capital structure of the business, including 1) the value assigned to the organizers’ equity accounts versus debt payable to the organizers and 2) each of the organizers’ cost basis in Tai-Ga. [TAX-660-01]
D. Compose a memorandum to stakeholders, including an executive summary of your recommendation and a detailed support section. [TAX-660-05]
II. Operating the Business:
A. Determine the appropriate inventory cost flow assumption for a merchandising business. [TAX-660-02]
B. Determine the appropriate overall business accounting method (cash, accrual, hybrid). [TAX-660-02]
C. Make a recommendation for the appropriate depreciation method and asset lives, including whether or not to make use of the availability of bonus depreciation under §168(k)
D. Determine the appropriate fiscal year end for a recommended business entity. [TAX-660-02]
E. Explain the tax implications related to multijurisdictional operations of a business, including interstate and international considerations. [TAX660-02]
F. Compose a memorandum to stakeholders, including an executive summary of your recommendation and a detailed support section. [TAX-660-05]
III. Restructuring the Business.
A. Determine tax consequences of the different distribution/contribution options in a business restructuring:
1. Identify relevant tax law for restructuring the business. [TAX-660-03]
2. Calculate the tax costs of a restructuring plan. [TAX-660-03]
3. Calculate the tax benefits of a restructuring plan. [TAX-660-03]
B. Compose a memorandum to stakeholders outlining restructuring recommendations, including an executive summary of your recommendation and a detailed support section based on research and analysis of relevant information. [TAX-660-05]
IV. Estate Planning.
A. Analyze a client scenario to determine appropriate factors in estate planning for maximizing the tax benefit of the stakeholder. [TAX-660-04]
B. Formulate a recommendation to the client based on research of IRS and other resources. [TAX-660-04]
C. Interpret research of IRS and other resources to determine relevance to all other stakeholder scenarios. [TAX-660-04]
D. Determine the appropriate information to advise each of the stakeholders, then communicate the impact of research results by composing a brief recommendation memorandum to the stakeholders. [TAX-660-05]
Milestones Overview
Milestone One: Establishing the Business In Module Four, you will submit a recommendation on the appropriate form for the new business, called Tai-Ga. This milestone will be graded with the Milestone One Rubric.
Milestone Two: Operating the Business In Module Six, you will submit a professional memorandum that provides recommendations for key operating decisions. This milestone will be graded with the Milestone Two Rubric.
Milestone Three: Restructuring the Business In Module Seven, you will consider the tax and nontax consequences of transactions involving stock or ownership as you advise Tai-Ga on restructuring the entity five years after formation of the business. This milestone will be graded with the Milestone Three Rubric.
Final Submission In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course, and include the new material from section IV, Estate Planning. This submission will be graded with the Final Project Rubric.
Guidelines for Submission: Your final paper should be a 12- to 15-page Microsoft Word document (excluding the cover page and reference pages), with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.
Please see attached submitted milestones, scenario, and other supporting documents..
ATTACHED FILE(S)
Alexander Apanyin
SNHU
MBA 660: 6-2. Final Project Milestone Two: Business Operation Recommendations
April 28, 2022
Memorandum
To: Stakeholders- Tai-Ga
From: The Tax Advisor
Date: April 28, 2022
Subject: Business Operation Recommendation
The objective of this memorandum is to offer business operation recommendations related to tax elections, inventory cost flows and other accounting matters that should be put into consideration before the start of business operations. The memo outlines the best tax and inventory practices that Tai-Ga should put into consideration to offer better support in establishment of business operations.
Inventory cost flow
In relation to inventory cost flow, there are couple of ways in which the business can accomplish its inventory cost flow. The first method is First in First out method (FIFO). Under FIFO, the first item to be stocked is the first item to be sold. This method is very critical in maintaining a balanced inventory. Another technique is Last in First out (FIFO), which assumes that the last item in is the first item to be sold. Under this method profits margins are higher than in FIFO. Third method is the specific identification method, where one can physically determine which specific products are purchased and sold. Cash flow moves with the actual items sold. This method provides accurate information on inventory value. The last method is the Weighted Average Cost which is used when a business does not have major changes in the inventory. It calculates the average of all products sold during a period of time (Team Hourly, 2021). The most suited inventory cost flow for Tai-Ga is FIFO, it will help the business to solve problem of overstocking thus reducing overhead costs. Also, the lower cost of goods sold under FIFO reduced the tax liability of the company.
Business accounting methods
In terms of business accounting, there are three major methods that Ta-Ga can use: cash accounting, accrual accounting and hybrid accounting. Cash accounting method records revenues and expenses when they are received and paid. Transactions are only recorded when cash is spent or received, making it one of the simple accounting methods. In accrual accounting method, a business records revenues and expenditures when they occur. Even though it is a complex accounting method, accrual accounting gives a more accurate picture of the financial condition of a company by matching revenues with the expenses. Transactions are recorded only when they are incurred and not when waiting on the payment. Hybrid accounting is a mix of cash accounting and accrual accounting method (Kosinski, 2021). Based on the three accounting methods, I would recommend cash accounting for Tai-Ga business. This method is effective in avoiding tax liability as it defers tax payments until the payment for a product or service is received by the business.
Depreciation method and asset lives
The best depreciation method for assets that Tai-Ga can implement to meet its financial objectives is the accelerated depreciation method. This type of valuing asset depreciation allows deductions of high expenses in the first few years of purchase of an asset and lower expenses as the asset ages. Modified Accelerated Cost Recovery System (MACRS) is a popular depreciation method that the business can use to value its live assets (Kagan, 2020). It allows a business to capitalize on the cost of an asset to be valued over a specified period through yearly deductions. From a tax perspective, the method is beneficial to a business as it allows larger deductions in first few years of operation then a smaller write off later (Levy, 2016).
Fiscal year end
Fiscal year is critical to business when it comes to tax purposes and financial reporting. A taxable year ends on 31st December of every year while fiscal year end is the reporting date which ends on a different quarter date. Doing tax reporting at the end of a taxable year, 31st December is ideal for the business as it allows Tai-Ga to perceive how did the business performs during each quarter. In addition, it is a more flexible period if the business is dealing with multijurisdictional operations.
Multijurisdictional operations
Different jurisdictions have different regulations when it comes to financial reporting and taxation. Therefore, when operating in different jurisdictions, a company should be aware of regulations related to business in a state or country they are operating in. In Some jurisdiction, businesses pay high taxes as compared to other jurisdictions. Therefore, when considering expansion to other territories, a business should consider expanding to jurisdictions that have low taxes as it will be beneficial for the business financially (Nelson, 2015). Understanding different rules of IFRS and US GAAP is important to understand regulations of different countries and states. Tai-Ga may expand to foreign nations of other states, therefore, it is imperative for the business to consider nations where it will be charged lower taxes. This will be imperative for the business as it will accrue more profits by paying less tax. By implementing the recommendations stated above, Tai-Ga will be in a better position to operate on better financials.
References
Team Hourly. (2021). What are the different inventory valuation methods for small businesses? https://www.hourly.io/post/inventory-valuation-methods
Levy, B. H. (2016). Depreciable asset lives: the forgotten estimate in GAAP. https://www.cpajournal.com/2016/09/08/depreciable-asset-lives/
Kosinski, J. (2021). Accounting methods: how to pick the best option for your business. https://www.patriotsoftware.com/blog/accounting/accounting-methods/
Kagan, J. (2020, May 31). Modified Accelerated Cost Recovery System (MACRS). https://www.investopedia.com/terms/m/macrs.asp#:~:text
Nelson, R. J. (2015, December 09). International Tax Laws: How to Understand Tax Implications of Doing Business Overseas

Alexander, Apanyin
MBA 660: 4-1, MILESTONE ONE (MEMO)
SNHU

APRIL 2022
Memo
Date: April 11, 2022
To: Stakeholders
From: The Tax Advisor
Subject: The Appropriate Form of Business for the owners of Tai-Ga
Executive Summary
The Tai-Ga organizers should form an S corporation. An S corporation is a type of company that protects members from taxes. It offers pass-through taxation to members, which help prevent double taxation. An S corporation also offers limited liability protection, which is also beneficial to members
Forms of Business
The following entity options are available to the organizers:
Partnership
A partnership business is made up of two or more individuals who combine different resources to form a business. These individuals share risks, losses, as well as profits. The four types of partnership are general partnership, limited partnership, limited liability partnership, and limited liability limited partnership. The main advantage of a partnership business is the exemption from tax at the entity level. Partners are taxed only at the individual level. However, members of a partnership (including general and limited partners) are subject to self-employment tax (Lewis, 2018). Additionally, each general partner is liable for all the partnership obligations. Each general partner is also liable for the wrongful acts and negligence committed by partners and employees in the scope of the partnership business.
C Corporation
A C corporation, also known as C-corp, is a legal entity that is owned by shareholders. A C corporation offers its shareholders limited liability protection. Since the corporation is a separate business entity, all obligations, liabilities, and debts are fulfilled by the corporation. A C corporation also enjoys low tax rates. This is more advantageous for a small business. A C corporation also offers fringe benefits – additional benefits offered to employees (Gerard, n.d.). Fringe benefits might be tax-deductible when they are offered to a shareholder-employee. The main disadvantage of a C-corp is double taxation. A C corporation is required to pay corporate income tax. And after paying dividends from after-tax earnings, the shareholders are required to pay individual income taxes.
S corporation
An S corporation, also known as S-corp, is a type of corporation that protects members from taxes. One major advantage of an S-corp is that shareholders are protected from double taxation. An S corporation is a pass-through entity. This means that business income, losses, credits, and tax deductions are passed through to the shareholders, instead of being taxed at the entity level (Huston, 2020). This prevents the double taxation problem that usually arises in a C-corp. An S corporation also provides limited liability protection to members. This means that members are not accountable for the corporation’s business debts and legal liabilities. One major disadvantage of an S corporation is that most fringe benefits offered by the corporation are subject to taxation.
LLC
A limited liability company (LLC) is a type of business that protects members from personal liability. As the name suggests, an LLC offers its members limited liability protection. This means that members are not personally accountable for business liabilities and debts. An LLC is also considered a pass-through entity. This means that the company itself does not pay taxes on corporate income. Instead, the members pay taxes on their share of the company’s profit. One major disadvantage of an LLC is that owners may have to pay self-employment taxes.
Recommendations
The Tai-Ga organizers should consider an S-corp. An S-corp offers limited liability protection to members. This means that shareholders are not accountable for the corporation’s business debts and legal liabilities. An S-corp also offers pass-through taxation to shareholders. This means that the corporation will not have to deal with double taxation. Double taxation occurs when business earnings are taxed twice at both the entity level and individual level. Tai-Ga will be a pass-through entity. A pass-through entity does not have to pay taxes. Instead, owners or members pay taxes on business profits. The Tax Cuts and Job Act (TCJA) – the significant tax reform law that came into force in 2018 – has established a new tax deduction for members of pass-through entities. According to the law, qualified pass-through members can deduct around twenty percent of their net income from the income taxes (Fishman, 2021). This reduces their income tax rate by twenty percent. As a qualified pass-through entity, Tai-Ga will benefit from this law. More specifically, the corporation will be able to optimize tax outcomes. For instance, if Tai-Ga has a total of 200,000 dollars in pass-through income, it can deduct up to 40,000 dollars. This deduction is scheduled to last until 2026.
Capital structure
The most vital element of forming a business is capital. It usually acts as the basis of the company or business. The Tai-Ga organizers should consider both equity and debt capital. Equity capital is money or funds raised by issuing shares to investors. In return, the corporation creates long-term shareholder value. Shareholder value will be determined by the ability of the company to increase sales, as well as free cash flow and earnings, which can increase capital gains and dividends for the shareholders. On the other hand, debt capital refers to funds or capital that a corporation borrows from lenders. In return, lenders will require repayment of the principal together with interest added to it. Tai-Ga should report its cost basis information to the IRS (Internal Revenue Service). Cost basis refers to the purchase price of an asset.
I hope you find this information useful.
References
Fishman, S. (2021). The 20% Pass-Through Tax Deduction for Business Owners. NOLO. Retrieved from: https://www.nolo.com/legal-encyclopedia/the-new-pass-through-tax-deduction.html#:~:text=For%20example%2C%20if%20you%20have,to%20understand%20this%20complex%20deduction.
Gerard, J. (n.d.). Tax Advantages of a C Corporation. Chron. Retrieved from: https://smallbusiness.chron.com/tax-advantages-c-corporation-3852.html
Huston, H. (2020). S corp (s corporation) advantages & disadvantages. Wolters Kluwer. Retrieved from: https://www.wolterskluwer.com/en/expert-insights/s-corporation-advantages-and-disadvantages
Lewis, T. (2018). IRS pursuing self-employment taxes from LLC members. Journal of Accountancy. Retrieved from: https://www.journalofaccountancy.com/issues/2018/may/self-employment-taxes-llc-members.html
Alexander Apanyin
SNHU
MBA 660: 7-2 Business restructuring recommendations
MAY 2022
Memo
Date: May 2, 2022
To: Owners of Tai-Ga
From: The Tax Advisor
Subject: Business Restructuring Recommendations.
EXECUTIVE SUMMARY
Change of entity is concerned about change of business ownership. A business always wants to make the best decision that will benefit all the stakeholders. Furthermore, a business must ensure that stock ownership seeks to benefit everyone. Stakeholders must ensure that they are benefiting from stock ownership.A business must make investment decisions where all stakeholders are able to benefit. The percentage of ownership interest in business is in relation to the percentage of stock a shareholder owns. Shareholders must make sure that they make decisions where they can benefit financially. In addition, stakeholders are more concerned with stock transaction tax. When selling securities, investors or stakeholders must choose between paying 20 percent of the profits from sale or to pay one percent withholding tax on the value of the sale. If investors choose to pay one percent withholding tax, the combined transaction tax is increased to 1.3 percent. Therefore, investors are more interested in stock transaction tax where they can save the most and incur more profits. In addition, investors seek to avoid being taxed twice when they sell stock. Therefore, Tia-Ga stakeholders will seek to choose stock transactions where they pay more tax. By changing the business ownership, Tai-Ga will have much impact on how much it pays in terms of taxes. A partnership business is taxed as the same as sole proprietorship. Partners are regarded to be the same tax entity as the business itself. Partnership business is pass through tax entity, which means the business itself does not pay income taxes. The business skips tax liability “passes through” taxation requirements. In partnership business, partners pay tax based on how much the partners earn (Thuronyi, 1998). They are responsible for paying their share of business pass through income. Partners must include taxes and debts on their personal income tax returns. This means that the amount paid by the business in the form of taxes will be focused on the amount partners earn from the business. partners are considered as self-employed and thus they must pay self-employment taxes.
The right type of partnership business can maximize savings on tax because it depends on how much the business is taxed. Certain types of businesses are best in relations to tax benefits. A business must register a business type that saves on taxes. Partnership business can be registered as limited liability company (LLC) which is more preferred by certain professionals. Tai-Ga can leverage on LLC to enjoy tax discounts associated with this type of business. LLC business has more flexibility because shareholders are able to file a partnership, where members are able to enjoy 20 percent pass through deduction if stakeholders accept to be taxed as a pass-through, which largely depends on the level of income of the business (Thurony, 1998). Therefore, even though majority of states do charge annual minimum taxes on LLCs, it is often insignificant and thus a business is able to save on taxes. Tax saving is major factor to consider when choosing a corporate entity with asset protection behind it.
The concept of income multiplier plays a critical role in investors understanding whether to stick with a company or to sell their shares. It is one of the underpinning principles of Keynesian economics. Income multiplies is about a dollar spend turns into more money. The best way for major suppliers for Tai-Ga to enter in business with the company is by buying a 10 percent of shares of the business. In this way, the suppliers will be able to benefit from the business if it makes profits. Also, the investors will be in a position to make critical decisions related to the business because of having significant shares to the business. Based on the given details, Tai-Ga is projected to experience potential financial growth (Thuronyi, 1998). Therefore, purchase of the company’s stock by Brian is a potential investment. By buying 2 percent of the business, Brian will be able to benefit from the growth of the business. Based on debt-to-equity ratio of Tia-Ga, Brian can understand the potential risks associated with the business and whether to buy stocks of the company. A small business with only owner pays a tax of 13.3 percent on average while business with more than one owner pay 23.6 percent on tax. On the other hand, small corporations known as s corporations pay an average of 26.9 percent. Therefore, rather than being the owner of the business through partnership, it is imperative to buy stock of the company. Always, businesses to ensure that they enjoy tax benefits as possible. Tai-Ga income stood at $17.5 million. However, 5 million dollars of the business invested in inventory and other operating assets. Therefore, based on the earnings, LLCs type of business would be perfect for Tai-Ga business. based on the two percentages, a business can understand whether it is able to benefit from a given tax option. Business tax is based on its income. The reason for partnership business is that shareholders are not required to pay for income tax but to pay tax for profits passes through the owners and partners. Partnership is often viewed as an extension of its owners and helps partners not to bear the burden for tax.

References
Thuronyi, M. V. (1998).Tax Law Design and Drafting, Volume 2(Vol. 2). International Monetary Fund.

TAX 660 Final Project Scenario Narrative

For the final project, imagine you are working as a senior tax advisor at a midsize CPA firm. You are
approached by a group of four individuals interested in expanding an existing business. Brief background
on the individuals and the expertise they are bringing to the proposed business follows:

Carrie Carson: Carrie is a 60-year-old tai chi instructor living in Santa Fe, New Mexico. For many years,
she practiced in Hollywood, and because of an acting background, she developed a clientele including
many celebrities. About five years ago, when her husband died, she moved to Santa Fe to escape life in
the fast lane, and many of her celebrity clients still see her on a regular basis. The celebrities rave about
Carrie and her techniques and endorse her for free. At the encouragement of her celebrity friends,
Carrie has developed a unique set of products that she would like to market, but she readily admits she
has no marketing expertise.

David Duncan: Dave is a 50-year-old marketing expert. He started his marketing career in the home
office of a major chain of brick-and-mortar stores 25 years ago; over the years, he expanded his role
within that company to include management of internet marketing operations. He retired two years ago
when that company was acquired, and he moved to Santa Fe with his children. As a result of the
acquisition, Dave received a large severance package. He became a client of Carrie a year ago. They have
become good friends and look forward to working together. Dave is divorced and has two dependent
children, one in college in Boston and the other in high school in Santa Fe.

Naomi Nelson: Naomi is the 30-year-old manager of an auto parts warehouse in Santa Fe. She enjoys
her job but has gone as far as she can with that company. Naomi is looking for an opportunity with a
startup company and got to know Carrie through mutual friends. Naomi is single and has no children.

Andrew Anderson: Andy is a 65-year-old recently retired airline pilot. Andy has been a lifelong fan of
yoga and tai chi and has been going to Carrie’s classes almost since the day Carrie moved to Santa Fe.
Andy and his wife have always been prudent managers of their money, and they have a substantial net
worth. Andy receives military and airline pension income, plus his wife is a successful veterinarian and
continues to practice. Andy and his wife are interested in investing cash to help Carrie’s business expand
rapidly, and Andy would like to work at least part time for the business. Andy and his wife have three
grown children that are independent.

Carrie is presently operating as a proprietorship grossing $200,000 a year and netting $100,000 a year
after expenses. She has designed her line of clothing and other wearable gear, plus DVDs and other
products suitable for meditation, practicing tai chi, and similar activities. She has obtained copyright
protection for her creative work to the extent allowed by law.

Carrie does not have any inventory at the present time but plans to acquire inventory and begin
marketing and selling her products shortly after forming the new entity. Carrie does not plan to
manufacture her products. She will contract that activity out to manufacturing companies
recommended by her celebrity friends experienced in the marketing of their own personal lines. In
addition, one of Carrie’s closest friend’s business managers has agreed to offer his services as a
consultant to help Dave adapt his skill set to marketing Carrie’s line of products.

Dave has mapped out a business plan calling for modest sales and no or little profit in the first year, but
once things catch on, he projects considerable growth and profit potential as follows:

Year Sales Net Income
1 $1 million None
2 $5 million $500,000
3 $15 million $2 million
4 $30 million $5 million
5 $50 million $10 million

Carrie, Dave, Naomi, and Andy all plan to become owners of the business in the following ownership
percentages, but they are open to your suggestions:

 Carrie, 50%
 Dave, 20%
 Naomi, 5%
 Andy, 25%

Carrie will be contributing her designs, good will, and contacts willing to endorse her products for free.

Dave and Naomi will be contributing their hard work and expertise.

Andy will be contributing $500,000 to cover the cost of inventory and initial marketing and other
operating expenses.

Because the products will be marketed to customers in connection with a physical activity, all four
future owners are concerned about potential product and other liability and want to make sure the
choice of business entity protects them from personal liability should an adverse event result from
product use.

They plan to name the business Tai-Ga.

The Tai-Ga organizers (hereafter, “the Organizers”) want your professional advice regarding whether
they should form a partnership, an S corporation, a C corporation, or some other type of business entity.

This project will consist of four memorandums produced prior to three meetings with the Organizers.

First Meeting
In the first meeting, you are tasked with preparing a memorandum to the Organizers recommending a
type of business entity and how it should be capitalized. The form that you recommend for Tai-Ga will
be based on the tax and liability concerns communicated to you by the Organizers. In your
memorandum, you will address those concerns by discussing the tax and limited liability effects of the
different entity options available to the Organizers, and you will recommend what you feel is their best
choice based on that discussion. Assume that the organizers are concerned about minimizing their total
tax impact (the sum of the personal and entity tax cost) but even more concerned about minimizing
personal liability.

Second Meeting
The second meeting is about two weeks after the first meeting. The Tai-Ga owners have completed all
the legal steps necessary to set up the new business using the entity form that you recommended
during the first meeting. In the second meeting, you will explain the tax elections and other accounting
matters that must be considered prior to commencing operations. You will discuss the options available
to the Organizers and make specific recommendations.

Third Meeting
The third meeting will be five years after the first two meetings. The business has been successful and
Dave’s business projections have been substantially met. Based on a net income multiplier of 10:1, Tai-
Ga is now worth $100 million. Andy has become seriously ill and wants to sell his stock and withdraw
from the business. Two persons have expressed interest in buying Andy’s stock, but issuing new stock is
also a possibility. One person is the company’s CFO, Brian Bolton. Brian came on board about six months
after Tai-Ga commenced operations and has been instrumental in managing the financial aspects of the
company’s explosive growth. Brian has expressed interest in acquiring up to 2% ownership in Tai-Ga via
compensatory stock options. The other investor is Acme Manufacturing, one of Tai-Ga’s major suppliers:
They wish to acquire up to 10% ownership. They require your input on the best way to approach the
restructuring.

Over the last five years, Tai-Ga’s total net income has amounted to $17.5 million after reasonable
salaries were paid out to the owners over the years. Of that $17.5 million, $5 million has been invested
in inventory and other operating assets. The remainder ($12.5 million) is in cash. The owners have
expressed interest in distributing $2 million of the cash in some fashion, and they want you to consider
that in your memo. The remainder of the cash will be retained in the business to fund future growth.

Additionally, in light of Andy’s situation, the existing stakeholders would like you to research estate
planning for their situations and prepare a memorandum outlining your recommendations for each
member.

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TAX 660 Final Project Guidelines and Rubric

Overview
Working as an accounting associate in a financial organization requires the ability to apply tax and accounting knowledge in unique ways. Being able to identify
issues and communicate them effectively to team members and clients is essential for any financial career working in a privately held enterprise or working with
privately held clients. The final project for this course involves researching relevant tax code and creating of a set of memorandums to advise a hypothetical
group of individuals; you will organize, operate, and ultimately restructure a merchandising business.

In the final project, you will demonstrate your ability to communicate your effective investment and business strategy recommendations to your client. Your
proposed strategy could save the client millions of dollars over time, so it is imperative that you utilize your tax research skills and maintain compliance with all
governing rules and regulations.

The project is divided into three 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 Four, Six, and Seven. The comprehensive set of memorandums will be submitted in Module Nine.

In this assignment, you will demonstrate your mastery of the following course outcomes:
 TAX-660-01: Evaluate tax consequences related to various elements of business formation for advising stakeholders on the most advantageous
organizational structure
 TAX-660-02: Determine appropriate tax strategies associated with operating a multijurisdictional business for advising stakeholders on merchandising
methodologies
 TAX-660-03: Assess the tax costs and benefits associated with restructuring a business to recommend appropriate tax strategies based on relevant tax
law
 TAX-660-04: Propose effective strategies in estate planning for maximizing the tax benefit of stakeholders
 TAX-660-05: Communicate key considerations to stakeholders for use in making sound tax-oriented business decisions based on chosen strategy

Prompt
You will assume the role of tax advisor for a company made up of four stakeholders. In this case study, each stakeholder brings different assets and tax situations
to the table. You must design the appropriate business structure for the company as a startup, advise tax solutions when the business is in operation, and
counsel a tax strategy for each stakeholder during a restructuring. Your advice will be communicated in a series of memorandums for each scenario. Read the
full narrative of the scenarios, which will be addressed separately in the milestones.

https://learn.snhu.edu/d2l/lor/viewer/view.d2l?ou=6606&loIdentId=6116

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Specifically, the following critical elements must be addressed:

I. Establishing the Business
A. Explain the general tax advantages and disadvantages of each form of business. Include a discussion of how each business form addresses
owner concerns related to personal liability, return on investment, and tax costs related to compensation. [TAX-660-01]
B. Justify your choice of form of business entity for this venture based on stakeholder requirements for maximizing tax outcomes of business
owners. Determine tax implications for your investors related to various investment options, including calculating the tax benefits/costs and
identifying relevant tax law, code, and regulations. [TAX-660-01]
C. Make a recommendation for the capital structure of the business, including 1) the value assigned to the organizers’ equity accounts versus debt
payable to the organizers and 2) each of the organizers’ cost basis in Tai-Ga. [TAX-660-01]
D. Compose a memorandum to stakeholders, including an executive summary of your recommendation and a detailed support section. [TAX-660-05]

II. Operating the Business
A. Determine the appropriate inventory cost flow assumption for a merchandising business. [TAX-660-02]
B. Determine the appropriate overall business accounting method (cash, accrual, hybrid). [TAX-660-02]
C. Make a recommendation for the appropriate depreciation method and asset lives, including whether or not to make use of the availability of
bonus depreciation under §168(k)
D. Determine the appropriate fiscal year end for a recommended business entity. [TAX-660-02]
E. Explain the tax implications related to multijurisdictional operations of a business, including interstate and international considerations. [TAX-
660-02]
F. Compose a memorandum to stakeholders, including an executive summary of your recommendation and a detailed support section. [TAX-660-05]

III. Restructuring the Business
A. Determine tax consequences of the different distribution/contribution options in a business restructuring:
1. Identify relevant tax law for restructuring the business. [TAX-660-03]
2. Calculate the tax costs of a restructuring plan. [TAX-660-03]
3. Calculate the tax benefits of a restructuring plan. [TAX-660-03]
B. Compose a memorandum to stakeholders outlining restructuring recommendations, including an executive summary of your recommendation
and a detailed support section based on research and analysis of relevant information. [TAX-660-05]

IV. Estate Planning
A. Analyze a client scenario to determine appropriate factors in estate planning for maximizing the tax benefit of the stakeholder. [TAX-660-04]
B. Formulate a recommendation to the client based on research of IRS and other resources. [TAX-660-04]
C. Interpret research of IRS and other resources to determine relevance to all other stakeholder scenarios. [TAX-660-04]
D. Determine the appropriate information to advise each of the stakeholders, then communicate the impact of research results by composing a
brief recommendation memorandum to the stakeholders. [TAX-660-05]

3

Milestones Overview
Milestone One: Establishing the Business
In Module Four, you will submit a recommendation on the appropriate form for the new business, called Tai-Ga. This milestone will be graded with the
Milestone One Rubric.

Milestone Two: Operating the Business
In Module Six, you will submit a professional memorandum that provides recommendations for key operating decisions. This milestone will be graded with the
Milestone Two Rubric.

Milestone Three: Restructuring the Business
In Module Seven, you will consider the tax and nontax consequences of transactions involving stock or ownership as you advise Tai-Ga on restructuring the
entity five years after formation of the business. This milestone will be graded with the Milestone Three Rubric.

Final Submission
In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should
reflect the incorporation of feedback gained throughout the course, and include the new material from section IV, Estate Planning. This submission will be
graded with the Final Project Rubric.

Deliverables
Milestone Deliverable Module Due Grading
One Establishing the Business Four Graded separately; Milestone One Rubric
Two Operating the Business Six Graded separately; Milestone Two Rubric
Three Restructuring the Business Seven Graded separately; Milestone Three Rubric
Final Submission Nine Graded separately; Final Project Rubric

4
Final Project Rubric
Guidelines for Submission: Your final paper should be a 12- to 15-page Microsoft Word document (excluding the cover page and reference pages), with double
spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.

Critical Element Exemplary (100%) Proficient (90%) Needs Improvement (70%) Not Evident (0%) Value
Establishing the
Business: Tax
Advantages and
Disadvantages
[TAX-660-01]
Meets “Proficient” criteria and
demonstrates sophisticated
awareness of the business
forms and tax relationships
Explains the general tax
advantages and disadvantages
of each form of business
Explains the general tax
advantages and disadvantages
of each form of business, but
explanation is cursory or
contains inaccuracies
Does not explain the general
tax advantages and
disadvantages of each form of
business
5
Establishing the
Business: Form of
Business Entity
[TAX-660-01]
Meets “Proficient” criteria and
demonstrates in-depth
knowledge of business entity
choice ramifications
Justifies choice of form of
business entity based on
stakeholder requirements and
tax implications for investors
related to various investment
options, including calculating
the tax benefits/costs and
identifying relevant tax law,
code, and regulations
Justifies choice of form of
business entity based on
stakeholder requirements and
tax implications for investors,
but explanation is cursory,
contains inaccuracies, or is
missing key elements
Does not justify choice of form
of business entity based on
stakeholder requirements and
tax implications for investors
6
Establishing the
Business: Capital
Structure
[TAX-660-01]
Meets “Proficient” criteria and
demonstrates sophisticated
awareness of the impact of
capital structure on the
business
Makes an appropriate
recommendation for capital
structure of the business,
including value assigned to the
organizers’ equity accounts
versus debt payable to the
organizers and each of the
organizers’ cost basis in Tai-Ga
Makes a recommendation for
capital structure of the
business, but the
recommendation is
inappropriate, contains
inaccuracies, or is missing key
elements
Does not make a
recommendation for capital
structure of the business
5
Establishing the
Business: Memorandum
to Stakeholders
[TAX-660-05]
Meets “Proficient” criteria and
shows keen insight into the
appropriate composition of
each section of the memo
Composes a memorandum to
stakeholders, including an
executive summary of
recommendation and a detailed
support section
Composes a memorandum to
stakeholders, but memo is
cursory, contains inaccuracies,
or is missing key elements
Does not compose a
memorandum to stakeholders
5
Operating the Business:
Inventory Cost Flow
[TAX-660-02]
Meets “Proficient” criteria and
demonstrates in-depth
knowledge of inventory cost
flow calculations
Determines appropriate
inventory cost flow assumption
for a merchandising business
Determines appropriate
inventory cost flow assumption
for a merchandising business,
but assumption contains
inaccuracies or is missing key
elements
Does not determine
appropriate inventory cost flow
assumption for a merchandising
business
5

5
Operating the Business:
Business Accounting
Method
[TAX-660-02]
Meets “Proficient” criteria and
demonstrates in-depth
knowledge of the business
accounting method
Determines appropriate overall
business accounting method
Determines appropriate overall
business accounting method,
but explanation contains
inaccuracies or is missing key
elements
Does not determine
appropriate overall business
accounting method
5
Operating the Business:
Depreciation Method
and Asset Lives
[TAX-660-02]
Meets “Proficient” criteria and
demonstrates in-depth
knowledge of the depreciation
method and asset lives
Determines appropriate
depreciation method and asset
lives, including consideration of
Section 168(k)
Determines appropriate
depreciation method and asset
lives, but explanation contains
inaccuracies or is missing key
elements
Does not determine
appropriate depreciation
method and asset lives
6
Operating the Business:
Fiscal Year End
[TAX-660-02]
Meets “Proficient” criteria and
demonstrates keen insight into
the fiscal year end
determination
Determines appropriate fiscal
year end for recommended
business entity
Determines appropriate fiscal
year end for recommended
business entity, but explanation
contains inaccuracies
Does not determine
appropriate fiscal year end for
recommended business entity
5
Operating the Business:
Multijurisdictional
Operations
[TAX-660-02]
Meets “Proficient” criteria and
explanation shows a complex
grasp of tax implications related
to multijurisdictional
operations
Explains the tax implications
related to multijurisdictional
operations of a business,
including interstate and
international
Explains the tax implications
related to multijurisdictional
operations of a business, but
explanation contains
inaccuracies or is missing key
elements
Does not explain the tax
implications related to
multijurisdictional operations of
a business, including interstate
and international
5
Operating the Business:
Memorandum to
Stakeholders
[TAX-660-05]
Meets “Proficient” criteria and
shows keen insight into the
appropriate composition of
each section of the memo
Composes a memorandum to
stakeholders, including an
executive summary of your
recommendation and a detailed
support section
Composes a memorandum to
stakeholders, but memo is
cursory, contains inaccuracies,
or is missing key elements
Does not compose a
memorandum to stakeholders
5
Restructuring the
Business: Relevant Tax
Law
[TAX-660-03]
Meets “Proficient” criteria and
shows a complex grasp of tax
law related to this restructuring
Identifies relevant tax law for
restructuring the business
Identifies relevant tax law for
restructuring the business, but
explanation contains
inaccuracies or is missing key
elements
Does not identify relevant tax
law for restructuring the
business
6
Restructuring the
Business:
Tax Costs
[TAX-660-03]
Meets “Proficient” criteria and
shows a complex grasp of the
tax costs of a restructuring plan
Calculates the tax costs of a
restructuring plan for each of
the stakeholders involved and
the business entity
Calculates the tax costs of a
restructuring plan for each of
the stakeholders involved and
the business entity, but
calculations contain
inaccuracies or are missing key
elements
Does not calculate the tax costs
of a restructuring plan for each
of the stakeholders involved
and the business entity
6

6
Restructuring the
Business: Tax Benefits
[TAX-660-03]
Meets “Proficient” criteria and
shows a complex grasp of the
tax benefits of a restructuring
plan
Calculates the tax benefits of a
restructuring plan for each of
the stakeholders involved and
the business entity
Calculates the tax benefits of a
restructuring plan for each of
the stakeholders involved and
the business entity, but
calculations contain
inaccuracies or are missing key
elements
Does not calculate the tax
benefits of a restructuring plan
for each of the stakeholders
involved and the business
entity
6
Restructuring the
Business: Memorandum
to Stakeholders
[TAX-660-05]
Meets “Proficient” criteria and
shows keen insight into the
appropriate composition of
each section of the memo
Composes memorandum to
stakeholders outlining
restructuring
recommendations, including an
executive summary of the
recommendation and a detailed
support section based on
research and analysis of
relevant information
Composes memorandum to
stakeholders outlining
restructuring
recommendations, but memo is
cursory, contains inaccuracies,
or is missing key element
Does not compose
memorandum to stakeholders
outlining restructuring
recommendations
5
Estate Planning: Factors
in Estate Planning
[TAX-660-04]
Meets “Proficient” criteria and
demonstrates a complex grasp
of estate planning concepts for
stakeholder
Analyzes a client scenario to
determine appropriate factors
in estate planning for
maximizing the tax benefit of
the stakeholder
Analyzes a client scenario to
determine appropriate factors
in estate planning for
maximizing the tax benefit of
the stakeholder, but analysis
contains inaccuracies or is
missing key elements
Does not analyze a client
scenario to determine
appropriate factors in estate
planning for maximizing the tax
benefit of the stakeholder
5
Estate Planning:
Recommendation
[TAX-660-04]
Meets “Proficient” criteria and
demonstrates a complex grasp
of estate planning concepts for
stakeholder
Formulates recommendation to
client based on research of IRS
and other resources
Formulates recommendation to
client based on research of IRS
and other resources, but
recommendation contains
inaccuracies or is missing key
elements
Does not formulate
recommendation to client
based on research of IRS and
other resources
5
Estate Planning:
Research
[TAX-660-04]
Meets “Proficient” criteria, and
interpretation demonstrates a
complex grasp of estate
planning concepts for all
stakeholder scenarios
Interprets research of IRS and
other resources to determine
relevance to all stakeholder
scenarios
Interprets research of IRS and
other resources to determine
relevance to all stakeholder
scenarios, but interpretation
contains inaccuracies or is
missing key elements
Does not interpret research of
IRS and other resources to
determine relevance to all
stakeholder scenarios
5

7
Estate Planning:
Recommendation
Memorandum
[TAX-660-05]
Meets “Proficient” criteria, and
memo shows nuanced
understanding of the
appropriate composition of
each section of the memo
Determines the appropriate
information to advise each of
the stakeholders and then
communicates the impact of
research results by composing a
brief recommendation
memorandum to the
stakeholders
Determines and communicates
the impact of research results
by composing a brief
recommendation
memorandum to the
stakeholders, but memo is
cursory, contains inaccuracies,
or is missing key elements
Does not determine the
appropriate information to
advise each of the stakeholders
or communicate the impact of
research results by composing a
brief recommendation
memorandum to the
stakeholders
5
Articulation of Response Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
5
Total 100%

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