Expert Answers

Description REPRESENTATION OF CLIENT DURING IRS EXAMINATION Conduct of IRS Examination: Four of your team’s clients have contacted you recently. They have advised you that they are under examination by the IRS and want your assistance in dealing with the IRS.The fact patterns are provided below. CLIENT A: Client A has received a notification from IRS and has forwarded to you IRSCP2000 Notice.This notice reflects that the client appears to have omitted $575,000 of income from sales of securities on client’s 2019 tax return.You have checked the CP2000 and are able to determine that there apparently was a brokerage 1099 that the client had failed to provide you at the time of preparing the return.You further note that the omitted income appears to have resulted because the IRS calculation includes the sales price but not the cost of the securities as the Client has owned the securities for quite a while.In addition, although the securities had been held for more than a year the income is shown as short-term capital gain. The IRS also proposes to assess the accuracy related penalty QUESTIONS: Is this an IRS examination? How do you respond to IRS? What document do you need in order for IRS to discuss the matter with you? In Addition to asking your client, how can you confirm that there are no additional accounts that your client may have missed? In Addition to asking your client What should you do when preparing later years’ returns to prevent a recurrence?

Description Conduct of IRS Examination: One of your team’s clients have contacted you recently. They have advised you that they are under examination by the IRS and want your assistance in dealing with the IRS. Assignment: Draft a short answer to each of the clients based on the client’s questions. the client memo should be about 1 to 2 pages or a total of 4 to 8 pages maximum. CLIENT A: Client A has received a notification from IRS and has forwarded to you IRS CP2000 Notice. This notice reflects that the client appears to have omitted $575,000 of income from sales of securities on client’s 2019 tax return. You have checked the CP2000 and are able to determine that there apparently was a brokerage 1099 that the client had failed to provide you at the time of preparing the return. You further note that the omitted income appears to have resulted because the IRS calculation includes the sales price but not the cost of the securities as the Client has owned the securities for quite a while. In addition, although the securities had been held for more than a year the income is shown as short-term capital gain. The IRS also proposes to assess the accuracy related penalty QUESTIONS: 1.Is this an IRS examination? 2.How do you respond to IRS? 3.What document do you need in order for IRS to discuss the matter with you? 4.In Addition to asking your client, how can you confirm that there are no additional accounts that your client may have missed? 5.In Addition to asking your client What should you do when preparing later years’ returns to prevent a recurrence?

Description Assignment Question(s): Three Questions Each Carries 5 Marks) (total Marks 15) Q1. The following information extracted from the parent company Parent company loaned $1000 to Subsidiary with an interest rate of 5%. Parent company made a sale to Subsidiary for $500 cash. The inventory had originally cost Parent company $200. Subsidiary then sold that same inventory to an outsider for $700. Parent company made a sale to Sub for $800 cash. The inventory had originally cost Parent $300. Subsidiary has not yet sold that same inventory to an outsider. Required: Pass the elimination entries for the intercompany transactions. Answer: Q2. Explain the differences between translation and remeasurement of financial statements of a foreign subsidiary. Answer: Q3. The partnership of Ibrahim and Rawan has the following provisions: Ibrahim and Rawan receive salary allowances of SAR 50,000 and SAR 15,000, respectively. Interest is imputed at 5% on the average capital investment. Any remaining profit or loss is shared between Ibrahim and Rawan in a 3:1 ratio, respectively. Average Capital investments:Ibrahim, SAR 300,000; Rawan, SAR 150, 000 Net income SAR 300,000

Description i JUST NEED HELP WITH C AND D Panthers Corp., a U.S. importer of wine, placed an order with an Italian supplier for 1,000,000 bottles of wine, at a price of Euro 12 per bottle. Relevant exchange rates are as follows: Date Spot Rate Forward Rate (to January 31, 2022) 1-Nov-21 $ 1.119 $ 1.125 31-Dec-21 1.122 1.130 31-Jan-22 1.115 1.115 Panthers has an incremental borrowing rate of 12 percent (1 percent per month) and prepares the financial statements on December 31. Required a)Assume the wine was received on November 1, 2021, and payment was made on January 31, 2021. There was no attempt to hedge the exposure to foreign exchange risk. Prepare the journal entries to account for this import purchase. (20 points) b) Assume the wine was received on November 1, 2021, and payment was made on January 31, 2022. On November 1, Panthers entered into a three-month forward contract to purchase Euro 12 million. The forward contract is properly designated as a cash flow hedge of a foreign currency payable. Prepare the journal entries to account for the import purchase and foreign currency forward contract. (30 points) c)How would you change your answer in b) if Panthers designates the forward contract as fair value hedge of a foreign currency payable? Prepare the journal entries to account for the import purchase and foreign currency forward contract. (30 points). d)Summarize the difference in income under the three alternative scenarios. (20 points).

Description Background Tony Green runs Y Not Flowers, Inc. (YNF), a wholesale flower distributor with stores in several major metropolitan areas of the U.S. He is considering expanding his business, but he thinks his current accounting and financial systems are restricting that expansion. Additionally, he knows that YNF is not using data to make important business decisions. He has come to you for assistance. Instructions Your supervisor met with Tony and discussed his requirements in detail. At that meeting, they agreed on the following deliverables for your project. Document process activity using BPMN. After gaining an understanding of YNF’s business processes, you will document current processes using business process modeling notation (BPMN). This involves documenting four current business processes:a. Sales & Cash Receiptsb. Flower Purchases & Payments c. Other Purchases & Paymentsd. PayrollThese diagrams will serve multiple purposes. YNF expects to use them to train new employees. Plus, they will provide information about potential improvements to those processes by the efficient use of information technology. Additionally, they will also highlight areas where YNF is exposed to unnecessary risks in his business Recommend changes to YNF business processes to make it more effective and efficient. Analyze store and flower sales over five years, including the current year, using Excel. Tony is interested in knowing:a. Which stores are selling more flowers. b. Which flower is most popular and does that change depending on the month. c. Which flowers are most popular at which store. d. Which stores have grown the most/least since 2020. e. Which flower’s sales have increased/decreased the most since 2020. f. Other trends that can help evaluate store performance and potential pricing decisions.

Description This assignment asks you to complete a Horizontal analysis based on restaurant market share over the past year, and to complete a Vertical analysis for a Country Club working to improve its business mix and improve overall profitability.

Description Research Memo A: Hint: Both fact patterns are based on a recently decided tax case Fact Pattern #1 The legislature in the State of Red enacted a new law requiring out-of-state sellers to collect and remit sales tax on the retail sales of goods and services in the State. Sellers are required to collect and remit the tax to the State, but if they do not then in-state consumers are responsible for paying a use tax at the same rate. The Act covers only sellers that, on an annual basis, deliver more than $150,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State. Your client is a B-etsy online retailer with no employees or offices in the State of Red and, therefore, has not collected any sales tax under the new Act. Your client has received a notice from the State of Red requiring your client to register for a license to collect and remit the sales tax. A refusal to do so will result in your client being prohibited from online sales of any goods or services in the State. Your client wants to know if the business must comply with the sales tax requirements of the State of Red. Also, what implications might this have in other states where your client does business online? Prepare a tax memorandum for use in advising your client. State the issue(s) to be resolved and make sure to identify the specific authorities (code, statutes, case law etc.) that address your client’s tax issues. Make sure to weigh authorities both for and against your client’s position. The memo should be 2 pages, double spaced, one-inch margins, 12pt. Hint: search engine words “online seller” “sales tax” “court decision” Fact Pattern #2 Your client, Smartbucks, a U.S. corporation conducts a major part of its coffee business through its wholly owned international subsidiary, Trader Jobs, located on the Turks and Caicos Island. As Smartbuck’s accountants, your firm does the tax planning for these two related companies to minimize or avoid the payment of taxes by Smartbucks in the US which is a higher tax jurisdiction than Turks and Caicos jurisdiction. In the past Smartbucks sold industrial coffee equipment to Trader Jobs. Trader Jobs then sold the same equipment for profit. The profits from those sales were reported and taxed in the Turks and Caicos, which resulted in significant tax savings for Smartbucks. Your firm explained to your client that this transaction, known as “transfer pricing,” allows Smartbucks to shift profits that would otherwise be subject to U.S. tax offshore to avoid tax. Your firm wants to use the same method to identify and shift costs between Smartbucks and Trader Jobs. Specifically, Smartbucks has formulated a new latte coffee recipe with Trader Jobs and both companies would benefit taxwise if the research and development costs could be shared between them. To document the transaction, Smartbucks and Trader Jobs entered into a research and development (“R&D”) cost-sharing agreement which allows Trader Jobs the authority to license the new recipe internationally. You previously advised your client that the interplay of cost and income allocation between the two companies in this transaction will result in significantly reduced taxes for Smartbucks. You also advised your client that there is some risk in engaging in multinational corporate tax avoidance because the tax laws grant the IRS authority to allocate income and costs between related parties if it determines that any particular transaction fails to satisfy the arm’s length standard. As part of the R&D cost sharing agreement, your firm did not share the cost of certain employee stock options resulting in a substantial tax savings to Smartbucks in association with over $100 million in income. The IRS has reviewed the transaction and contends that the allocation of stock compensation costs between the companies must be appropriate to reflect economic reality and that the allocation of the employee stock compensation costs under the cost sharing arrangement fails the arm’s length standard. On behalf of Smartbucks, your firm contends that the IRS has exceeded its authority under the arm’s length standard because the cost sharing methodology used in the R&D cost sharing agreement established “parity with uncontrolled taxpayers” and the actual results or economic reality is irrelevant under the arm’s length standard. Methodology controls over result. Prepare a tax memorandum for use in advising your firm’s managing partner assigned to Smartbucks. State the issue(s) to be resolved and make sure to identify the specific authorities (code, statutes, case law etc.) that address your client’s tax issues. Make sure to weigh authorities both for and against your client’s position. The memo should be 2 pages, double spaced, one-inch margins, 12pt. Hint: search engine words: “related entities” “cost sharing” “court decision” the new recipe internationally. You previously advised your client that the interplay of cost and income allocation between the two companies in this transaction will result in significantly reduced taxes for Smartbucks. You also advised your client that there is some risk in engaging in multinational corporate tax avoidance because the tax laws grant the IRS authority to allocate income and costs between related parties if it determines that any particular transaction fails to satisfy the arm’s length standard. As part of the R&D cost sharing agreement, your firm did not share the cost of certain employee stock options resulting in a substantial tax savings to Smartbucks in association with over $100 million in income. The IRS has reviewed the transaction and contends that the allocation of stock compensation costs between the companies must be appropriate to reflect economic reality and that the allocation of the employee stock compensation costs under the cost sharing arrangement fails the arm’s length standard. On behalf of Smartbucks, your firm contends that the IRS has exceeded its authority under the arm’s length standard because the cost sharing methodology used in the R&D cost sharing agreement established “parity with 

Description i need to put this answers in tax memo format. It need to be in this order: Relevant Facts Specific Issues Conclusions Support Is this an IRS examination? - CP2000 is not an examination action. (confirmed with lecture ppt) No, this is not an IRS examination because the CP2000 Notice is classified as a non-examination review. This notice is also referred to as an “underreporter inquiry'' and it depicts proposed changes to the taxpayer’s return for that year. According to IRM §4.19.7.1.4, calculations of the taxpayer’s account are made under the Automated Underreporter System—a system through which the IRS analyzes the variances between the third-party-reported information (e.g., Form 1099 data) and the income reported on a tax return. This is not considered a traditional, formal audit but more of an audit review, where the IRS attempts to correct errors by comparing external reports of income to submissions by the taxpayer. In the event of such discrepancies, it sends this notice identifying the issue to the taxpayer and asks for an explanation or correction of the discrepancy. How do you respond to IRS? According to IRS Publication 5181 (Rev. 12-2022), we will have to send a Response form in an envelope provided by the IRS. This Response form must be sent by the deadline stated in the CP2000 Notice. In our client’s case, it needs be filled out as if they disagree by selecting the “I don’t agree with some or all of the changes” option. We will advise the client that they cannot sign the agreement form in the notice. We will also have to include supporting documentation and an explanation of why they disagree, addressing each item in the notice. In this instance, we need to explain why the income from the brokerage 1099 was not included in the return and that the income from securities reported as a short-term gain is really from securities held in the long term. The publication also states that if income was left out of the return unintentionally, to tell the IRS and they will add it. If the IRS accepts our explanation, they will send us a letter stating they accept the return as filed and recommend we keep the letter with our tax records. If the IRS accepts our explanation for some issues and not all of them, they will send us a revised notice that includes the issues that were not resolved. From then, we will have to decide if we agree or disagree with said issues and respond within the given time frame. If the IRS does not accept our explanation or documents included in the response, they will send a letter explaining why they did not accept what we provided. 3. What document do you need in order for IRS to discuss the matter with you? (Jazmine) In order for the IRS to discuss the matter with us, we would need our client’s signature on Form 2848, Power of Attorney, and Declaration of Representative so that we may effectively represent them in dealing with the IRS regarding this CP2000 Notice. Without it, the IRS agent we try to discuss the matter with will not grant us any information about this notice. This form is paramount as it helps us review and respond to any inquiries made by the IRS. It is also important in resolving discrepancies and clarifying matters arising from the taxpayer’s return. 4. In Addition to asking your client, how can you confirm that there are no additional accounts that your client may have missed? Just to be on the safe side and for the highest degree of accuracy, we shall further request the transcript of our client’s income documents from the IRS directly by availing Form 4506-T, Request for Transcript of Tax Return, to avoid leaving out any financial account. This is a strategic measure that will help us secure a detailed record of every return that has been filed under your Social Security Number. We will use this step as a cross-verification of our account information with official IRS records to not miss any essential details needed in filing our client’s taxes correctly. This is inline with best practices when using Form 4506-T in the preparation of tax and the representation of the client—ensuring that due accurate account and reflection of any pertinent financial data in your dealing with IRS (Nickpour et al., 2022). 5. In Addition to asking your client What should you do when preparing later years’ returns to prevent a recurrence? To ensure that such discrepancies on tax returns do not happen again in the future, this is the type of case where it should be ensured that the review of any work done is thorough. This will involve carefully collecting and verifying all relevant financial documents, along with using a checklist that includes all accounts from which income may be derived. Additionally, we plan to utilize the most up-to-date tax preparation software with advanced built-in error detection to correct any discrepancies before filing. Equally important will be our commitment to staying in touch with our client and scheduling an annual tax planning session. The literature by Nickpour et al. (2022) emphasizes that such sessions are meant to ensure a comprehensive capture and accurate reporting of all financial activities relevant, thereby guarding against oversights and subsequent filings based on inaccurate data.

Description Earnings Release Assignment PURPOSE The purpose of this assignment is to review a current year earnings release (10-Q) from a publicly traded gaming corporation(Casino). As a result of this assignment, students will be more familiar with the jargon used on such releases, understand the overall financial performance of a publicly traded gaming corporation, and evaluate the impact on the associated stock price. This assignment is intended to integrate the material learned in class. All accounting/auditing work ultimately rolls up to the compilation of the financial reporting package to be presented at the quarterly earnings release. This data results in operators analyzing their financial performance and making adjustments if necessary, but also preparing to conduct their forecast and budgets. Submissions are expected to resemble those presented to an upper level manager in a gaming operation and will give students an opportunity to apply written communication skills. TASK Select a current year earnings release from a publicly traded gaming corporation to review. They should be traded on the NYSE or NASDAQ as those require earnings releases. If you choose another stock exchange company you must get approval prior to doing the assignment by emailing the company name and the earnings release you will be analyzing to the professor and they will give final approval (please make sure you email enough in advance based on office hours to get approval). No prior approval, no credit. While not required, it is suggested that you pick a company that operates in the gaming jurisdiction that you selected in the earlier assignment. This may give you more insight into their operations. To find a company’s 10-Q, go to the company website and look for a page labeled something along the lines of “Investor Relations” or “SEC Filings”. Under type of filings select Quarterly Filings and select the most recent 10-Q. You are required to answer the following questions in Word. 1. (20 points) How does the corporation intend to maximize the return to shareholders? 2. (15 points) Explain “hold-normalized adjusted property EBITDA”. Why is that used as a metric? If not used in your selection, please research and respond. 3. (15 points) How strong is the corporation’s cash flow? What does that allow the corporation to accomplish 4.(20points)What was a major driver in the operating results? Are there any areas with diminishing returns? 5. (10 points) Was there any impact due to the adoption of new accounting standards? If so, please explain. 6. (20 points) How did the market interpret the reported results?

Description Slide 3: Impact on Decision-Making - Discuss how social responsibility can shape decision-making by encouraging organizations to consider the impact of their actions on society and the environment. - Provide examples of companies making decisions based on social responsibility, such as implementing sustainable practices or supporting charitable causes.