Posted: February 20th, 2021
TAX RESEARCH MEMORANDUM ASSIGNMENT 1
As we learned in Week 4, the Code allows taxpayers to take a deduction for the cost of meals when taxpayers have been deemed to be “away from home” for tax purposes. This determination can be difficult. Two separate clients came to you with questions as to whether they are entitled to take a deduction for the cost of meals incurred during a particular trip. The facts pertaining to each are:
1. Tracey is a sales representative for a national pharmaceutical company. She has a rather large sales territory, and she makes her rounds to her customers using a company-owned car over a 16- to 19-hour period of time. During these one-day business trips, Tracey will pull over in a suitable location (such as a park or a rest stop) and take a short nap in the backseat of her automobile.
2. Mark captains a ferryboat. This ferryboat carries tourists on roundtrips from Seattle to Victoria and back, each trip of which lasts from 15 to 17 hours and provides for a 6- to 7-hour layover in Victoria. During the layover, Mark typically takes a four-hour nap on a cot that he has stored in the pilothouse of the ferryboat.
Under each of these circumstances, if the taxpayer entitled to deduct the cost of meals purchased during the trip at issue?
TAX RESEARCH MEMORANDUM ASSIGNMENT 2
It appears as though a couple of your clients have encountered an unfortunate development in their financial situation. Cindy and Ralph Edmonds own TidyCo., Inc. TidyCo, in turn, owns and operates several coin Laundromats in and around Dubuque, Iowa. Over the last two years, the
Edmonds made weekly deposits of the Laundromat receipts to corporate and personal bank accounts. However, it now also appears (unknown to you!) That they also siphoned off a portion of the weekly collections and took them home rather than depositing them. These amounts, which appear to total about $200,000 were hidden in shoe boxes around the house and (surprise!) were not reported as income.
The IRS found out about these amounts and has notified them that it intends to bring criminal tax evasion charges against them under Section 7201 of the Code. The IRS has made quite clear that it believes that the Edmonds’ actions constitute prima facie evidence that they intended to defraud the government and should therefore be liable under the statute.
As their accountant, you know that TidyCo has a deficit in both its accumulated and current E&P accounts and that this deficit has existed over the entire period that the IRS contends the Edmonds illegally invaded income taxation. It also appears as though the Edmonds’ basis in their TidyCo stock is $300,000 (before the stashed-away money at their home is considered). Do these facts have any bearing on the evasion charges the IRS seeks to bring against them?
RESEARCH ESSAY ASSIGNMENT 1
We spent a substantial amount of time in Week 4 discussing the payment and taxation of corporate dividends. Some of this discussion simply begs the question as to how commonplace dividend distributions are in the United States. Utilizing at least three (3) commercial or journal related websites, ascertain and detail how common dividend distributions are in today’s economic climate, particularly since the economic downturn of 2008 and 2009. Furthermore, ascertain and analyze whether dividend distributions are concentrated in the companies that are publicly traded (such as the New York Stock Exchange or NASDAQ) or whether closely held corporations pay them with equal frequency and/or at the same rates. In your analysis, make sure that you discuss and consider the various considerations that each type of corporation (publicly traded and closely held corporations) balance in determining whether to pay dividends, including the tax consequences of doing so.
NOTE: You must either (1) submit complete citations to these online resources so that your instructor may find these studies online or (2) submit complete copies of these online resources with your submission. Failure to do so will result in a zero for the assignment.
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