Discuss the tax consequences of contributing cash, property, and/or services to the new entity
Your term paper begins with a scenario provided below. You must examine the facts stipulated inthe scenario, define various entity types, and make a recommendation regarding entity selection.You will provide responses to various tax implications [that may differ] based on your entityselection. You will be graded on a clear, concise, but comprehensive paper that shows theinstructor that you can interpret tax law, apply it to a real-world scenario, and communicate it in anorganized and well-thought-out manner.The due date for the paper will be the end of Week 6.ScenarioAfter 20+ years of working for other firms, three professionals are considering combining forcesand establishing their own practice. The three professionals are Penelope (enrolled agent, age41), Mark (CPA, age 43), and John (CVA, age 65). Penelope specializes in taxes, Mark is anauditor, and John is a business valuation expert.There are various options available regarding entity selection for the new business venture. Theappropriate business entity for any individual(s) will depend on their particular facts andcircumstances.You are a valued colleague and friend of this trio, and they have come to you seeking advice asto how to structure their new business. Please consider the following tax and nontax issues asyou recommend an entity choice to Penelope, Mark and John.I. Research and describe the main characteristics of the various forms of organization (i.e.,entity) that are available to Penelope, Mark, and John.II. Become familiar with the tax implications of choosing one form of organization overanother.III. Make your recommendation as to what form of organization (choosing only one) youbelieve will be most beneficial for the group from a tax standpoint. Be sure to explain thereasoning for your choice. Once your choice is made, discuss the various tax implicationshttps://devryu.instructure.com/courses/27381/pages/week-2-term-paper-overview-due-week-6?module_item_id=3024912 1/3
6/5/2018 Week 2: Term Paper Overview (Due Week 6): Federal Taxes and Management Decisionsto the entity and to the three individuals, as follow.IV. Discuss the tax consequences of contributing cash, property, and/or services to the newentity (discuss only for the entity you have recommended).V. Discuss, in detail, how this entity is taxed (if at all) and what filing requirements it has withthe IRS (discuss only for the entity you have recommended).VI. Discuss how income and distributions may or will be allocated to Penelope, Mark, andJohn (discuss only for the entity you have recommended).VII. Discuss, in detail, how the individuals are taxed (if at all) with respect to the net profits fromthis entity and what filing requirements they will each have with the IRS (discuss only forthe entity you have recommended).VIII. Discuss how Penelope, Mark and John will calculate their “basis” in the new entity. Be sureto include the impact that debt has on basis, if any (discuss only for the entity you haverecommended).IX. Regarding limited liability, discuss the exposure that Penelope, Mark, and John’s personalassets will have to the debts and lawsuits of the entity you have recommended (discussonly for the entity you have recommended).X. Conclude why entity selection is important to a newly forming business.Grading RubricYour paper is worth 250 points and will be graded by the following criteria.Category PointsVarious Forms of Organizations Available 5Recommendation and Reasoning 25Tax Consequences of Contributions 10Taxation and Filing Requirements of Entity 10Allocation of Income and Distributions 10Taxation and Filing Requirements of10IndividualsBasis Calculation 10Limited Liability 10Importance of Entity Selection 10https://devryu.instructure.com/courses/27381/pages/week-2-term-paper-overview-due-week-6?module_item_id=3024912 2/3
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