Business Structure

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]