04 Mar The complete Writing Project and Presentation is found in Getting Started. Upload the portion of the project due this week. Requirements: Writing and interpreting results
The complete Writing Project and Presentation is found in Getting Started. Upload the portion of the project due this week.
Requirements:
Writing and interpreting results is a large part of your learning experience. These assignments are designed to improve your use of technology and communication skills. You will now be sharing your ideas with your classmates. Create a PowerPoint presentation discussing the key elements of the writing project. You may use the voice-over feature in PowerPoint to present your PowerPoint.
You will upload a copy of your PowerPoint or the YouTube link to this discussion board AND comment to at least 1 other student on his/her presentation that you watched. Please be sure the audio is clear and the file or link is accessible in the Week 4 Presentation discussion board
Due Dates: This presentation is due on Friday so others have time to comment on your work and you can respond back to them.
Grading Rubric: Please refer to the grading rubric in your grade book for specific requirements.
Library Assistance
Click on this document for assistance with your PowerPoint presentation How to Access Tutorial for PowerPoint in the Library.docx How to Access Tutorial for PowerPoint in the Library.docx – Alternative Formats
Graded Activity:
Click on Getting Started to review the requirements for the writing project. Then click the link above labeled "Part 4 Writing Project – Part 4 (Presentation)" to complete part 4 of the writing project and to comment to others on their presentations.
Solution1-3
| Problem 78 | |||||||||||
| 1. Compute TCFs current income tax expense or benefit for 2013 | |||||||||||
| Income before income taxes | $ 4,525,000 | ||||||||||
| Interest from municipal bonds | (10,000) | ||||||||||
| Nondeductible stock compensation | 5,000 | ||||||||||
| DPAD | (8,000) | ||||||||||
| Nondeductible fines | 1,000 | ||||||||||
| Book equivalent of taxable income | $ 4,513,000 | ||||||||||
| Net change in cumulative TTD | (500,000) | ||||||||||
| Net change in cumulative DTD | 140,000 | ||||||||||
| Net change cumulative TD | (360,000) | ||||||||||
| Taxable income | $ 4,153,000 | ||||||||||
| x 34% | 0.34 | ||||||||||
| Current tax expense | $ 1,412,020 | ||||||||||
| 2. Compute TCF's deferred income tax expense or benefit for 2013 | |||||||||||
| Ending balance in TTD | $ (1,870,000) | ||||||||||
| Beginning balance in TTD | (1,700,000) | ||||||||||
| Increase in deferred tax liability | $ (170,000) | ||||||||||
| Ending balance in DTD | $ 268,800 | ||||||||||
| Beginning balance in TTD | 221,000 | ||||||||||
| Increase in deferred tax asset | $ 47,800 | ||||||||||
| Deferred tax expense | $ 170,000 | ||||||||||
| Deferred tax benefit | (47,800) | ||||||||||
| Net deferred tax expense | $ 122,200 | ||||||||||
| Tax provision | |||||||||||
| Current income tax expense | $ 1,412,020 | ||||||||||
| Deferred income tax expense | 122,200 | ||||||||||
| Total income tax provision | $ 1,534,220 | ||||||||||
| Check | |||||||||||
| Book equivalent of taxable income | $ 4,513,000 | ||||||||||
| x 34% | 0.34 | ||||||||||
| Total income tax provision | $ 1,534,420 | ||||||||||
| 3. Prepare a reconciliation of TCF's total income tax provision with its hypothetical income tax expense | |||||||||||
| Reconciliation of Effective Tax Rate | Dollars | Percent | |||||||||
| Provision at 34% [$4,525,000 x 34%] | $ 1,538,500 | 34.00% | [$1,538,500/ $4,525,000] | ||||||||
| Tax exempt interest ($10,000 x 34%) | (3,400) | -0.08% | [$3,400 / $4,525,000] | ||||||||
| Nondeductible stock compensation ($5,000 x 34%) | 1,700 | 0.04% | [$1,700 / $4,525,000] | All these number were changed | |||||||
| DPAD ($8,000 x 34%) | (2,720) | -0.06% | [$2,720 / $4,525,000] | ||||||||
| Nondeductible fines ($1,000 x 34%) | 340 | 0.01% | [$340 / $4,525,000] | ||||||||
| Provision | $ 1,534,420 | 33.91% | |||||||||
Solution4
| 4. Assume TCF’s tax rate increased to 35% in 2013. | |||||||
| Recompute TCF’s deferred income tax expense or benefit for 2013 using the following template: | Changed the year to 2013. | ||||||
| Tulip City Flowers, Inc. | |||||||
| Temporary Difference Scheduling Template | |||||||
| BOY | Beginning | Current | EOY | Ending | |||
| Taxable (Favorable) | Cumulative | Deferred | Year | Cumulative | Deferred | ||
| Temporary Differences | T/D | Taxes (@ 34%) | Change | T/D | Taxes (@ 35%) | ||
| Non-current | |||||||
| Accumulated depreciation | (5,000,000) | (1,700,000) | (500,000) | (5,500,000) | (1,925,000) | ||
| BOY | Beginning | Current | EOY | Ending | |||
| Deductible (Unfavorable) | Cumulative | Deferred | Year | Cumulative | Deferred | ||
| Temporary Differences | T/D | Taxes (@ 34%) | Change | T/D | Taxes (@ 35%) | ||
| Current | |||||||
| Allowance for bad debts | 100,000 | 34,000 | 10,000 | 110,000 | 38,500 | ||
| Prepaid income | 0 | 0 | 20,000 | 20,000 | 7,000 | ||
| Total current | 100,000 | 34,000 | 30,000 | 130,000 | 45,500 | ||
| Non-Current | |||||||
| Deferred compensation | 50,000 | 17,000 | 10,000 | 60,000 | 21,000 | ||
| Accrued pension liabilities | 500,000 | 170,000 | 100,000 | 600,000 | 210,000 | ||
| Total non-current | 550,000 | 187,000 | 110,000 | 660,000 | 231,000 | ||
| Total | 650,000 | 221,000 | 140,000 | 790,000 | 276,500 | ||
| Ending balance in TTD | $ (1,925,000) | ||||||
| Beginning balance in TTD | (1,700,000) | ||||||
| Increase in deferred tax liability (expense) | $ (225,000) | ||||||
| Ending balance in DTD | $ 276,500 | ||||||
| Beginning balance in TTD | 221,000 | ||||||
| Increase in deferred tax asset (benefit) | $ 55,500 | ||||||
| Deferred tax expense | $ 225,000 | ||||||
| Deferred tax benefit | (55,500) | ||||||
| Net deferred tax expense | $ 169,500 | ||||||
| Recompute TCFs current income tax expense or benefit for 2012 | |||||||
| Income before income taxes | $ 4,525,000 | ||||||
| Interest from municipal bonds | (10,000) | ||||||
| Nondeductible stock compensation | 5,000 | ||||||
| DPAD | (8,000) | ||||||
| Nondeductible fines | 1,000 | ||||||
| Book equivalent of taxable income | $ 4,513,000 | ||||||
| Net change in cumulative TTD | (500,000) | ||||||
| Net change in cumulative DTD | 140,000 | ||||||
| Net change cumulative TD | (360,000) | ||||||
| Taxable income | $ 4,153,000 | ||||||
| x 35% | 0.35 | ||||||
| Current tax expense | $ 1,453,550 | ||||||
| Tax provision | |||||||
| Current income tax expense | $ 1,453,550 | ||||||
| Deferred income tax expense | 169,500 | ||||||
| Total income tax provision | $ 1,623,050 | ||||||
| Check | |||||||
| Book equivalent of taxable income | $ 4,513,000 | ||||||
| x 35% | 0.35 | ||||||
| Total income tax provision | $ 1,579,550 | ||||||
| The check procedure no longer works because the tax rate changed from the beginning to the end of the year. | |||||||
| The difference of $43,500 ($1,623,050 – $1,579,550) results from tax effecting the net cummulative book differences at the beginning of | |||||||
| of year ($4,350,000) times the change in tax rate (1%). |
,
2
Memo on U.S Tax System
Valery Salazar
Keiser University
Corporate Business, and Trust Tax
Gregory Gosman
February 17, 2023
MEMO
To: Our Valued Client
From: Tax Professional
Date:21/2/2023
Re Legal Entities Recognized by the US Tax System
Introduction
As your tax advisor, I have looked through your current setup as a sole proprietorship and would like to give you a rundown of the legal entities allowed by the US tax system and the key distinctions between them. Furthermore, I will cover the pros and cons of switching from being a single proprietor to becoming a corporation. Lastly, I will discuss the norms and practices that underpin professional ethics in the context of corporate, commercial, and trust taxes.
Legal Entities and Their Characteristics
The US tax system recognizes four distinct types of legal entities;
1. Sole Proprietorships
2. Partnerships
3. Corporations
4. Limited Liability Corporation (LLC)
Sole Proprietorship: A sole proprietorship is a business owned and operated by a single person. To whatever extent a firm incurs debt or liability, such debt or liability is ultimately the owner's responsibility. The proprietor's tax return is where the company's earnings and losses are detailed (Pfeifer & Yoon, 2019).
Partnership: When many people share company ownership, it is called a partnership. Each partner has individual responsibility for the company's debts and obligations. Partners must include partnership income and losses on tax filings (Greenman et al., 2021). A partnership is company ownership and management in which two or more individuals work together to run the show on Florida business. There are many distinct kinds of partnerships, such as general, liability, and limited liability partnerships. The partners must pay any debts or liabilities, and any profits or losses must be included in the partners' individual tax filings (Lidstone, 2021).
Corporation: When its stockholders form a company, it becomes a distinct legal entity. A shareholder's liability is limited to the amount invested in a company, whereas the business is accountable for its debts and obligations. A company's legal structure consists of a board of directors, officials, and shareholders and may issue shares to provide financial backing.
Limited Liability Company (LLC): LLCs are special business organization that incorporates the advantages of corporations and partnerships (Hatfield, 2019). A limited liability company (LLC) functions similarly to a corporation in that its owners are shielded from legal responsibility for the debts and actions of the business while still being taxed as a partnership.
Advantages and Disadvantages of Changing from Individual Ownership to Corporate Structure.
There are positive and negative aspects to transforming a single proprietorship into a corporation.
Advantages:
· Limited liability protection: As a general rule, a shareholder's assets are shielded from the debts and liabilities of a company because of the limited liability protection afforded by the entity's structure.
· Ability to raise capital: Stock offerings are popular for corporations to generate finance, especially when expanding their operations.
· Tax advantages: Healthcare insurance, like other employee benefits, may be deducted by a business, and tax rates for corporations can be lowered.
Disadvantages:
· Increased complexity and cost: Compared to a sole proprietorship, operating a corporation involves more paperwork, legal expenses, and regular upkeep. It might also need more staff to deal with the ensuing influx of work.
· Double taxation: To put it another way, a company's earnings are taxed twice: once by the business itself and once by the shareholders who own its shares.
· Less flexibility: Corporations have less leeway than single proprietorships since they must adhere to additional formalities and rules.
Ethical Principles and Professional Conduct Linking to Corporate, and Trust Taxation
As a tax advisor, I have vowed always to act professionally and ethically while dealing with client matters, including business, trust, and corporate taxes. This includes telling the truth, not misleading others, avoiding conflicts of interest, and following all relevant laws and regulations.
Conclusion
In summary, In the United States, there are four distinct types of legal entities, each with its own set of benefits and drawbacks for tax purposes. Limited liability, access to financial markets, and favorable tax treatment are some benefits that may be gained by transforming a sole proprietorship into a corporation.
Sincerely,
Tax Professional
References
Greenman, C., Esplin, D., Johnston, R., & Richards, J. (2021, July 7). Understanding Ethics in the Varying Segments of the Accounting Profession. Papers.ssrn.com. https://ssrn.com/abstract=3882222
Hatfield, M. (2019). Professionally Responsible Artificial Intelligence. Arizona State Law Journal, 51, 1057. https://heinonline.org/HOL/LandingPage?handle=hein.journals/arzjl51&div=33&id=&page=
Lidstone, H. K. (2021). LLC or Inc.? Entity Selection for a Small Business. SSRN Electronic Journal. <a rel='nofollow' target='_blank' href='https://doi.org/
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