MEMORANDUM To: Mr. John Smith and Mrs. Jane Smith From: Sarah Gong Date: November 25, 2012 RE: 2011 Tax Strategy Dear John and Jane, Thank you for the opportunity to work on your behalf for tax preparation this year. Per our previous discussion, I have prepared this memo as a preliminary work on this year’s tax strategy. The three main sections are constructed according to inquiries made by each of you individually and, then, to conclude on the options available for you both and my recommendation
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It was a pleasure to meet with you last week. This memo is in regard to your concerns that you mentioned during our meeting and my recommendation for each one. Please review this memo and call me if you have any questions. 1) John Smith tax issues: a. How is the $300,000 treated for Purposes of Federal Tax income? Gross income means” all income from whatever source derived, including (but not limited to the following items: Compensation for services, including fees, commissions, fringe benefits,
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Memo |To: |Mr. & Mrs. John Smith | |From: |----------, CPA | |CC: |---------------------- | |Date: |May , 2013 | |Re: |YOU DECIDE, WEEK 4 | John Smith Tax Concern 1(a): The issue is the $300,000 in income for John’s fees. How to treat
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John Smith tax issues: a. How is the $300,000 treated for purposes of Federal tax income? Under Internal Revenue Code (IRC) 61, section (a) subsection (1) gross income is defined as “Compensation for services, including fees, commissions, fringe benefits, and similar items.” This section of the tax code is very comprehensive to almost all forms of income with very few exceptions. This has also been held up by the supreme court in numerous cases including the land mark Eisner v. Macomber, 1
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1. John Smith tax issues: a. How is the $300,000 treated for purposes of federal tax income? John is to report the $300,000 as earned income. This gross income can be filed on Schedule C of his individual tax return or as gross income on the LLC return. Our course text book defines gross income as gross income is defined by the Code as including gross income derived from a business. Income is the fundamental concept of income is set forth in the Sixteenth Amendment, “incomes from whatever source
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John Smith worked on a case for more than two years and received a lump sum payment of $300,000 for his work plus an additional $25,000 for pre-paid expenses. He wants to know how this money will be treated for tax purposes. John’s company is what is known as an LLC or Limited Liability Company, and for U.S. federal income tax purposes, an LLC is treated by default as a pass-through entity. Since John is the only person in the company, the LLC is treated as a “disregarded entity” for tax purposes
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years or more, we need to allocate on a “pro rata” basis the amount recovered. This will help us to determine if there is a deductible amount for this year, and how much to include in your income. (c) In order to reduce the taxable amount of John Smith, the prior year’s returns should be reviewed in order to establish minimum reportable expense recovery revenue. The settlement revenue needs to be added to business revenue for this year, and then all applicable business expenses can be deducted
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Emma In Emma, a novel by Jane Austen, social status is determined by one’s family background, reputation, and wealth. One of the main ways to raise one’s social status is marriage but marrying too far above oneself may lead to unhappiness. There are a number of marriages in Emma and in each marriage the match strengthens the social status of the characters. The marriage between Jane Fairfax and Frank Churchill is very interesting because their social status are not equal. Jane Fairfax is the daughter
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John Smith Tax issue 1(a) Issue: The issue is the $300,000 in income for John’s fees. How to treat this in Income Tax? Rule of Law: Section 61(a) of the Code the concept of income is broad and general. 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; (2) Gross income derived from business; (3) Gains derived from dealings in property;
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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)
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