...MEMORANDUM To: John and Jane Smith From: XXXXXX, CPA Near Lakes City Date: February 7, 2013 Dear Mr. & Mrs. Smith, Thank you for coming to our offices and allowing us to review and discus your concerns regarding your tax questions. I have been assigned to reply to your questions and I have listed my recommendations below. After you both have reviewed these recommendations, please contact me so we can go over any additional questions you may have. Mr. Smith’s questions: 1(a) How is the $300k treated for purposes of Federal tax income? According to the IRC §61(a)(1), “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items”, the $300,000 you received must be included as part of your gross income, compensation for services, and as such it is taxable. 1(b) How is the $25,000 treated for purposes of federal tax income? The $25k you received as a recovery for expenses you paid in advance must also be treated as income. In general, an expense cannot be deducted if paid in advance. This is true for both the cash basis method of accounting and the accrual method of accounting. The prepaid amount is treated as an asset with a useful life extending beyond the current tax year, and carried over to the tax year where the expense applies. The Internal Revenue...
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...Executive Summary Custom PCs®aims to offer its customers the flexibility of a custom built computer while providing afriendly and personal shopping experience. Unlike its competitors, Custom PCs® will give each customera personally tailored computer based on their particular needs, so that customers will not have to pay forwhat they don’t need. By carefully analyzing a customer’s needs and preferences, Custom PCs can providea perfect fit based on the customer’s intended uses, and the computer will be built instantly in the store.Custom PCs also aims to assist the elderly and less informed computer shopper to make their shoppingexperience as pleasant as possible.Custom PCs® is a privately held corporation run by its owner, Jack Gray. Jack has six years of experiencein computer building and repair, with two years of employment atComputer Renaissance, where he sold,repaired, and built computers and accessories. He has also maintained a private computer repair servicefor two years. He will be supported in daily operations by an assistant manager/computer technician anda part-time assistant manager, both with extensive experience in computer repair, sales, andmanagement.With technology growing rapidly and a large generation still knowing so little about computers, there is astrong need for personal computer shopping. With specialized technology and graphic and speed intensivePC games and software, the lack of power in shelf bought computers calls for a more needs based methodof...
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...1] Contract labor system * A workman is deemed to be employed as Contract Labor when he is hired in connection with the work of an establishment by or through a contractor. Contract workmen are indirect employees; persons who are hired, supervised and remunerated by a contractor who, in turn, is compensated by the establishment. * 3. Contract labor should not be employed where (a) The work is perennial and must go on from day to day;(b) The work is incidental to and necessary for the work of the factory;(c) The work is sufficient to employ considerable number of whole time workmen; and (d) The work is being done in most concerns through regular workmen. * 4. The Contract Labor (Regulation and Abolition) Act, 1970 Act and the Contract Labour (Regulation and Abolition) Central Rules, 1971 came into force on 10.2.71 * 5. Main objective of the Contract Labour (Regulation & Abolition) Act, 1970 is two fold:-i) To regulate the employment of Contract Labour in certain establishments; andii) To provide for its abolition in certain circumstances. In order to achieve above objectives, the Act lays down various requirements with regard to hiring of Contract Labour, its wages & earnings, working conditions etc. * Every Every industry engaging 20 or more workers on contract basis.6. contractor engaging 20 or more workers. * Contract is awarded by the concerned department /commercial7. Concerned deptt. send a job request to the purchase deptt.department...
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