Fed Taxes & Mgmt Decisions

Question description

Prepare a three-page memo (at least 900-1,500 words per page) to John and Jane Smith addressing the issues presented: 1. John Smith tax issues:a. How is the $300,000 treated for purposes of federal tax income?b. How is the $25,000 treated for purposes of federal tax income?c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? d. Is it more beneficial to continue leasing the business space or to buy the building?2. Jane Smith tax issues:a. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for federal income tax purposes?b. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John’s case?c. Does Jane have a business or hobby? Why is this distinction important?d. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry-making activities?e. What tax benefits would John realize if he invested $15,000 in Jane’s jewelry making?f. Can Jane depreciate her vehicle or jewelry-making equipment? How?3. John and Jane Smith tax issue:a. Should John and Jane file separate or joint tax returns?You Decide: It’s your turn as a tax professional to decide on the best course of action from a tax perspective on their issues as presented above.For each issue, begin by restating the issue and numbering as shown above [i.e., 1(a), 1(b), etc.]. Next, explain and discuss the tax rules that apply to the issue, which you gleaned from your tax research. Then, conclude with a definitive answer to the issue, supported by citations to the sources used. So for each issue, you shouldstate the issue;explain and discuss the applicable law (IRC sections, regulations, court decision, and so forth); andpresent your answer in the form of a concluding paragraph that refers to specific language from the IRC sections, regulations, court decisions, and other sources (if applicable) to support the conclusion.*A template has been provided in Doc Sharing for your use in preparing this activity. Please use it!CitationsCitations are required. You must provide citations whenever you refer to the sources of tax law used in this memorandum. You may cite your sources in numbered footnotes, numbered endnotes, or in parentheses immediately after the sentence mentioning the cited source.Grading RubricCategoryPointsDescriptionSuperior100–125Content and subject: Easily identifiable, clear; meets or exceeds page or word-length requirement; all required citations are providedStructure: Apparent, understandable, and applicable; excellent flow and well structuredAnalysis: Interesting and novel; provides different perspectives; demonstrates critical thinking and critical analysis at a high level Mechanics: Virtually devoid of errors in grammar, syntax, punctuation, and spellingAchieving80–99Content and subject: Concrete overall, but may be slightly unclear; meets or exceeds page- or word-length requirement; some citations missingStructure: Generally clear and appropriateAnalysis: Evidence relates to the content; evidence may lack some clarity; critical analysis and critical thinking apparentMechanics: Good sentence structure (syntax), grammar, punctuation, and spelling, with minor errorsAverage65–79Content and subject: Fairly easy to read and understand, but paper meanders from topic or lacks cohesion or content; meets page- or word-length requirement; missing most citationsStructure: Overall good, with minor shortfalls Analysis: Some critical thinking, but minimal or no analysis or further discussion by the adult learnerMechanics: Sentence structure has some errors relative to syntax, grammar, punctuation, and spellingBelow Average< 65Content and subject: Often unstructured and vague; content not totally applicable to the paper's requirements or introduces substantial material not relevant to the assignment and/or the relevant discussion points; no citations provided for tax law research Structure: Mostly unclear and difficult to visualize Analysis: Very limited with no analysis or further discussion by the adult learner that demonstrates adult learner critical thinking/analysisMechanics: Numerous mistakes in sentences, paragraph formatting, spelling, and grammar that subtract from the content of the paper; writing errors suggest minimal likelihood that paper was proofread for errors prior to submission; writing not at graduate level