Suppose you are a CPA hired to represent a client that iscurrently under examination by IRS. The client is the president and95% shareholder of a building supply sales and warehousingbusiness. He also owns 50% of thr stock of a construction company.The client’s son owns the remaining 50% of the stock of theconstrucyion company. The client has received a Notice of ProposedAdjustments (NPA) on three (3) significant issues identified in theNPA are unreasonable compensation, stock redemptions, and a rentalloss, Unreasonable compensation: The taxpayer receive a salary of$10 million composed of a $5 million. The total gross receipts ofthe building supply business are $300 million. The NPA by the IRSdisallows the salary based on 5% of gross receipts as aconstructive dividend. Stock redemptions: During the audit period,the construction company redeemed 50% of the outstanding stockowned by the client and 50% of the stock owned by the client’s son,leaving each with the same ownership percentage of 50%. The IRStreated the redemption as a distribution under Section 301 of theIRC. Rental loss: The rental loss results from a building leased tothe construction company owned by the client. Use the internet toresearch the rules and income tax laws regarding unreasonablecompensation, stock redemptions treated as dividends and relatedparty losses. Write a three to four (3-4) 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 eitheracceptance of the proposed adjustments or further appeal of theissue based on the potential for prevailing on appeal, (2) Create atax plan for the future redemption of the client’s stock owned inthe construction company that will not be taxed according toSection 301 of the IRC. (3) Propose a strategy for the client toreceive similar amounts in compensation in the future and avoid thetaxation as a constructive dividend.
https://graduatepapertutors.com/wp-content/uploads/2019/10/logo-300x60.png 0 0 Joseph https://graduatepapertutors.com/wp-content/uploads/2019/10/logo-300x60.png Joseph2021-02-14 17:58:122021-02-14 17:58:12suppose you are a cpa hired to represent a client that iscurrently under examination 3734976