The purpose of this assignment is to analyze and review company report specifications. You will apply what you have learned in past principles of practice by completing one of the following options. The instructor will assign you a scenario that includes a corporation’s pertinent financial information.
Using your corporation’s information and what you have learned in this course, develop a memo to your client, using the outline presented. The memo should be 500-750 words and must include the following information:
- Explanation of the taxpayer’s business and issue at hand (heading: Facts).
- Explanation of the IRS rules regarding the matter (also part of Facts).
- Tax laws and applicable court cases to support the deductions, where applicable (heading: Analysis).
- Conclusion as to the recommendations to the company (heading: Conclusion).
The organization of the memo should present the headings in the following order: Facts, Conclusion, Analysis. The response should be formatted as a professional business memo to the client. Please save your assignment as a Word document with the filename: LastnameFirstInitial.ACC460.M.docx, where the M refers to Memo.
Problem I:10-55 from the textbook (revised to include additional research).
The Morris Corporation is a very successful and profitable manufacturing corporation. The corporation just completed leasehold improvements of its corporate offices, primarily for its top executives. The president and founder of the corporation, Mr. Timothy Couch, is an avid collector of artwork and has instructed that the lobby and selected offices be decorated with rare collections of art. These expensive works of art were purchased by the corporation in accordance with Couch’s directives. Couch justified the purchase of these works of art on the premise that (1) they are excellent investments and should increase in value in the future, (2) they provide an appropriate and impressive atmosphere when current and prospective customers visit the corporation’s offices, and (3) the artwork is depreciable property and the corporation will be able to take sizable write-offs against income. The financial vice-president of the corporation has requested your advice as to the depreciability of the leasehold improvements and the art. Prepare a research memorandum for the financial vice-president on this issue. Include a discussion on the different depreciation methods permitted and the availability of those methods of depreciation for leaseholds and the art.
A partial list of research sources includes:
- Sections 167 and 179
- Rul. 68-232, 1968-1 C.B. 70
- Shauan C. Clinger, 60 T.C.M. 598 (1990).
- Simmon v. Comr., 103 T.C. 247 (1994), aff’d 95-2 USTC ¶ 50,552 (2d Cir. 1995) nonacq. 1996-2 C.B.I.
- Liddle v. Corm., 103 T.C. 285 (1994), aff’d, 95-2 USTC ¶ 50,488 (3rd 1995)
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.