TAX 650 Final Project Guidelines and The final project for this course is the creation

TAX 650 Final Project Guidelines and RubricOverviewThe final project for this course is the creation of a memorandum with appendix (7–10 pages).As an associate working in a privately held enterprise or working with privately held clients, it is imperative to be able to advise clients on the tax implications oftheir financial investments. The ability to model the tax consequences of transactions and do cost benefit analysis is crucial.For your final project, you will model the role of an associate working in a private consulting firm. You will demonstrate your ability to advise clients on whetherthey should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. Additionally, using your tax research skills and understanding offederal income taxation, you will have the opportunity to evaluate tax consequences from sales and distributions for their compliance with the Internal RevenueCode and Treasury regulations.The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality finalsubmissions. These milestones will be submitted in Modules Three, Five, Seven, and Eight. The final product will be submitted in Module Nine.In this assignment, you will demonstrate your mastery of the following course outcomes:Recommend an appropriate business tax entity based on the analysis of a tax situation for achieving favorable economic impact on the client’s taxableincomeUtilize appropriate tax forms and schedules that compute taxable income on individual tax returns and reflect versatility of thought, resulting in the besteconomic solution for the individual taxpayerApply accrual and cash basis accounting best practices and moral reasoning in determining when business transactions may be reported for income taxpurposesAssess the economic impact on taxable income for the business tax entity in relation to Internal Revenue Code and Treasury regulations and the optimumdesired outcomes for the clientEvaluate the tax consequences that result from sales or distributions of property for their compliance with IRS Circular 230, Internal Revenue Code, andthe American Institute for Certified Public Accountants and for advising the clientPromptYou are currently working at a mid-sized certified public accounting firm. Your client is Bob Jones. Bob, age 60 and single, has recently retired from IBM. He has$690,000 available in his 401(k) fund and he is thinking of using that money to open a used car business that will be located at 210 Ocean View Drive inPensacola, Florida. Bob has estimated that the business might make $300,000 in taxable income.Bob’s personal wealth including investments in land, stocks, and bonds is about $14,000,000. He reported an interest income of $20,000 and dividend income of$6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000.Bob has hired your firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. Heis also considering transferring a possible 40% interest in his new business to his daughter Mandy, age 23 and single.Prepare a memorandum to the client, recommending a type of business entity, including an appendix of supporting IRS tax schedules and forms.Specifically, the following critical elements must be addressed:I.MemorandumA. Recommend a type of business entity for the client to consider based on your tax research. Consider justifying your recommendation using thecode and regulations that relate to the business entity.B. Differentiate between accrual accounting and cash basis. Based on the type of business and the client’s accounting system, what is the impactwhen revenue is recognized?C. Based on the decision of accrual vs. cash basis, describe when revenue would be recognized on the sale of inventory, and how the accrualreporting differs from cash basis.D. Determine the economic impact on the client’s financial situation. Based on your decision, determine the potential tax liability, keeping in mindappropriate Internal Revenue Code and Treasury regulations.E. Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, broker’s fees,closing costs, appraisals, and surveys and the correct schedule form to complete.F. Justify whether or not the client should choose a business entity that has limited liability protection. Be sure to include possible future liabilityissues based on the potential economic impact and appropriate Internal Revenue Code and Treasury regulations.G. Describe the tax effect on the recommended business entity and the impact it will have on the client’s personal tax return. Consider addressinghow the business entity affects the completion of the 1040 tax form.II.ConclusionA. Evaluate the economic impact on the client’s personal returns based on the recommended entity. Justify why the client would not choose theother business entities by informing the client of the differences.B. Justify your recommendation regarding the client’s daughter having an ownership interest. Provide details supporting the recommendationtaking into consideration the jargon and mechanics of the transaction.C. Summarize, using moral reasoning, cash or accrual basis accounting systems in relation to the selected business entity. Consider how theaccounting system impacts revenue recognition, consistent with Internal Revenue Code and Treasury regulations.D. Describe the after tax effects on the client’s cash flow based on the sale of the land that is needed to provide the funds necessary to start thebusiness. Consider including capital gains tax rules.E. Explain whether or not the client and his child should take a salary or cash distribution according to tax purposes and Internal Revenue Code andTreasury regulations. Consider the type of business and the tax effect whether it is salary, dividends, or cash withdrawal.III.AppendixBased on your recommendation to the client regarding proprietorship, taxable income, and sale of land, complete the appropriate tax schedules andforms described below.A. Prepare the appropriate page of Form 1040 and include the sale of the client’s land on the appropriate tax schedule and form for therecommended business entity. Be certain to complete each tax schedule and form accurately and complete ly.B. Prepare the appropriate schedule and tax forms to reflect taxable income based on your calculations and the disposition of asset. Be certain tocomplete each tax schedule and form accurately and completely.C. Illustrate how creative problem solving and versatility of thought impact professional advice that you intended to result in the best economicsolutions for the client. Consider providing real-world examples to support your claims.MilestonesMilestone One: Gross Income and Capital GainsIn Module Three, you will submit a draft of the gross income and capital gains, analyzing the following critical elements: I. Memorandum, section E, and II.Conclusion, sections D and E. You must compute the property disposition capital gain and taxation of gross income. In completing this assignment, consider thetax effect of salary dividends or cash withdrawal in accordance with Internal Revenue Code and Treasury regulations. This assignment will be submitted as aWord document. This milestone is graded with the Milestone One Rubric.Milestone Two: Revenue Recognition and Accounting MethodsIn Module Five, you will submit a draft of the revenue recognition and accounting methods, summarizing the following critical elements: I. Memorandum,sections B, C, and D, and II. Conclusion, section C. You will determine revenue recognition and the economic impact of the client’s financial situation. Based onyour decision, determine the potential tax liability, keeping in mind appropriate Internal Revenue Code and Treasury regulations. This assignment will besubmitted as a Word document. This milestone is graded with the Milestone Two Rubric.Milestone Three: Choice of Business EntityIn Module Seven, you will submit a draft of the choice of business entity, analyzing the following critical elements: I. Memorandum, sections A, F, and G, and II.Conclusion, sections A and B. The short paper will communicate tax aspects of business entities to the client. This assignment will be submitted as a Worddocument. This milestone is graded with the Milestone Three Rubric.Milestone Four: Tax FormsIn Module Eight, you will submit IRS draft tax forms, analyzing all of the critical elements in III. Appendix, sections A, B, and C. Based on your research, the taxforms and schedules will support your recommendation to the client. This assignment will be submitted as completed tax forms, which are provided to you inyour textbook resource CD or on the IRS website. This milestone is graded with the Milestone Four Rubric.Final Submission: Memorandum With AppendixIn Module Nine, you will submit a memorandum with an appendix to the client and all IRS tax forms and schedules necessary to support your advice. It should bea complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout thecourse. This submission is graded with the Final Product Rubric.DeliverablesMilestoneOneTwoDeliverableGross Income and Capital GainsModule DueThreeGradingGraded separately; Milestone One RubricFiveGraded separately; Milestone Two RubricThreeRevenue Recognition and AccountingMethodsChoice of Business EntitySevenGraded separately; Milestone Three RubricFourTax FormsEightGraded separately; Milestone Four RubricFinal Submission: Memorandum WithAppendixNineGraded separately; Final Product RubricFinal Product RubricGuidelines for Submission: Your memorandum must be 7 to 10 pages in length (plus a cover page and references) and must be written in APA format. Use doublespacing, 12-point Times New Roman font, and one-inch margins. Your memorandum must include an appendix containing electronic versions of the appropriateIRS tax schedules and forms. Include at least three references cited in APA format.Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more informati on,review these instructions.Critical ElementsMemo: BusinessEntityExemplaryMeets “Proficient” criteria anddetails are justified usingappropriate Internal RevenueCode and Treasury regulationsrelevant to recommendedbusiness entity(100%)ProficientRecommends a type of businessentity for the client to considerthat is based on tax research(90%)Needs ImprovementRecommends a type of businessentity but either the citedInternal Revenue Code andTreasury regulations areinaccurate or details are cursory(70%)Not EvidentDoes not recommend a type ofbusiness entity(0%)Value6.4Memo: AccrualAccounting vs. CashBasisMeets “Proficient” criteria andprovides a full description ofwhich entities require accrualand when it is optional(100%)Differentiates between accrualaccounting and cash basis andidentifies the impact of therevenue(90%)Memo: RevenueRecognized on theSaleMeets “Proficient” criteria anddescribes the installmentmethod of reporting revenue(100%)Memo: EconomicImpactMeets “Proficient” criteria andaddresses payroll tax issues andself-employment tax(100%)Memo: TaxConsequencesMeets “Proficient” criteria andcomprehensively addresses allexpenses including how best toreport on the schedule(100%)Meets “Proficient” criteria andincludes information aboutlimited liability companies(100%)Describes when revenue wouldbe recognized and how thereporting differs for accrualaccounting vs. cash basis(90%)Determines the economicimpact on the client’s financialsituation and potential taxliability, and determinations areconsistent with InternalRevenue Code and Treasuryregulations(90%)Identifies the tax consequenceson the sale or exchange of theland consistent with capitalgains rules(90%)Justifies whether or not theclient should choose a businessentity that has limited liabilityprotection and includes possiblefuture liability issues consistentwith Internal Revenue Code andTreasury regulations(90%)Memo: LimitedLiability ProtectionDifferentiates between accrualaccounting and cash basis andidentifies the impact of therevenue, but the details areinaccurate or cursory(70%)Describes when revenue wouldbe recognized and how thereporting differs but details areinaccurate or cursory(70%)Determines the economicimpact on the financial situationand potential tax liability buteither the referenced InternalRevenue Code and Treasuryregulations are inaccurate ordetails are cursory(70%)Identifies tax consequences butdetails are either inconsistentwith capital gains rules orcursory(70%)Justifies whether or not tochoose a business entity thathas limited liability protectionbut does not include possiblefuture liability issues, possiblefuture liability issues are notconsistent with InternalRevenue Code and Treasuryregulations, or details are eitherinaccurate or cursory(70%)Does not differentiate betweenaccrual accounting and cashbasis or does not identify theimpact of the revenue(0%)6.4Does not describe whenrevenue would be recognized orhow the reporting differs(0%)6.4Does not determine theeconomic impact on thefinancial situation and potentialtax liability(0%)6.4Does not identify taxconsequences(0%)6.4Does not justify whether or notto choose a business entity thathas limited liability protection(0%)6.4Memo: Tax EffectMeets “Proficient” criteria andaddresses the client’s after taxflow(100%)Describes the tax effect on therecommended business entityand the impact on the client’spersonal tax return(90%)Conclusion:Economic Impact:Personal ReturnsMeets “Proficient” criteria andshows keen insight into theadvantages and disadvantagesof choosing appropriatebusiness entities(100%)Conclusion:Ownership InterestMeets “Proficient” criteria anduses appropriate voice for theaudience(100%)Conclusion: Cash orAccrual BasisAccounting SystemMeets “Proficient” criteria andidentifies the impact on revenuerecognition consistent withInternal Revenue Code andTreasury regulations(100%)Conclusion: TaxEffects on Cash FlowMeets “Proficient” criteria andcites capital gains tax rul esrelating to gains and losses(100%)Evaluates the economic impacton the client’s personal returnsbased on the recommendedentity and justifies response byincluding information about theother entities(90%)Justifies recommendationregarding the client’s daughterhaving an ownership interestusing details supporting therecommendation(90%)Summarizes, using moralreasoning, cash or accrual basisaccounting systems in relationto the selected business entityconsistent with appropriateInternal Revenue Code andTreasury regulations(90%)Describes the after tax effectson the client’s cash flow basedon the sale of the land that isneeded to start the business(90%)Describes the tax effect on therecommended business entityand the impact on the client’spersonal tax return, but detailsare irrelevant or cursory(70%)Evaluates the economic impactof client’s personal returns butdoes not provide justification ordetails lack relevance or arecursory(70%)Does not describe the tax effecton the recommended businessentity and the impact on theclient’s personal tax return(0%)6.4Does not evaluate the economicimpact of client’s personalreturns(0%)6.4Justifies recommendationregarding client’s daughterhaving an ownership interestbut details either lack relevanceor are cursory(70%)Summarizes cash or accrualbasis accounting systems inrelation to the selected businessentity, but details either lackmoral reasoning or are cursory(70%)Does not justify therecommendation regardingclient’s daughter havingownership interest(0%)6.4Does not summarize cash oraccrual basis accountingsystems in relation to theselected business entity(0%)6.4Describes the after tax effectson the client’s cash flow that areneeded to start the business butdetails are either inaccurate orcursory(70%)Does not describe the after taxeffects on the client’s cash flowthat are needed to start thebusiness(0%)6.4Conclusion: Salaryor Cash DistributionMeets “Proficient” criteria andincludes the tax effect on salary,dividends, or cash withdrawal(100%)Appendix: Form1040Appendix: Scheduleand Tax FormAppendix:Professional AdviceMeets “Proficient” and providesreal-world examples to supportclaims(100%)Articulation ofResponseSubmission is free of errorsrelated to citations, grammar,spelling, syntax, andorganization and is presented ina professional and easy-to-readformat(100%)Explains whether or not theclient and his child should take asalary or cash distributionaccording to tax purposes andInternal Revenue Code andTreasury regulations(90%)Prepares the appropriate pageof Form 1040 accurately andcompletely, including the sale ofthe client’s land on theappropriate tax form andschedule(100%)Prepares the appropriateschedule and tax formaccurately and completely,reflecting taxable income basedon calculations and thedisposition of asset(100%)Illustrates how creative problemsolving and versatility ofthought impacts professionaladvice intended to result in thebest economic solutions for theclient(90%)Submission has no major errorsrelated to citations, grammar,spelling, syntax, or organization(90%)Explains whether or not theclient and his child should take asalary or cash distribution butdetails are cursory or notconsistent with tax purposesand Internal Revenue code andTreasury regulations(70%)Prepares the appropriate pageof Form 1040 on theappropriate tax form andschedule, but details are eitherincomplete or inaccurate(70%)Prepares the appropriateschedule and tax form reflectingtaxable income but detai ls areincomplete or inaccurate(70%)Illustrates how creative problemsolving and versatility ofthought impacts professionaladvice intended to result in thebest economic solutions for theclient but details are irrelevantor cursory(70%)Submission has major errorsrelated to citations, grammar,spelling, syntax, or organizationthat negatively impactreadability and articulation ofmain ideas(70%)Does not explain whether or notthe client and his child shouldtake a salary or cash distribution(0%)6.4Does not complete theappropriate page of Form 1040and does not include the sale ofthe client’s land on theappropriate tax form andschedule(0%)Does not prepare theappropriate tax form reflectingtaxable income(0%)6.4Does not illustrate how creativeproblem solving and versatilityof thought impacts professionaladvice intended to result in thebest economic solution for theclient(0%)6.4Submission has critical errorsrelated to citations, grammar,spelling, syntax, or organizationthat prevent understanding ofideas(0%)4Earned Total6.4100%

 

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