A210 Research Assignment #3 Your lients, Dinah and Oliver Arrow are in the business of renovating homes and reselling them. They are considering purchasing a small yacht that they can use on the Columbia River and other local waterways near Vancouver, Washington where they work and live. They hope they can use the yacht to both travel to and from locations where they are renovating, carrying materials, and to use as advertising for their company. They may spend the night on the yacht from time to time if held over at a client site. The local lake and riverfront are very active, so the couple feels they would be very visible. The yacht will be docked a few miles from their home adjacent to a lot where they store construction materials. For most client sites it is over 100 miles by road but usually within 40 miles by river. They want to deduct the yacht as a business expense as they will use it for: e Transportation of construction materials to the building sites Mobile office while working on construction Temporary housing while at client sites (instead of hotels or commuting back home). e Advertising by having signage on the sides of the boat and/or a flag with their company logo on it. e Meetings with customers while at various construction sites. s Social gatherings or other forms of entertainment while trying to gain new business. This is an idea in process and they are being very good clients by asking your advice BEFORE they make a decision, rather than after. Think this through carefully so you can offer them good advice! 1. (Four points) Find two IRC Sections that relate to this topic. Read them and synthesize what you learned into one or two sentences. Cut and paste the relevant IRC Sections at the END of this document with enough detail so | can see that they are relevant. Properly cited IRC here. Properly cited IRC here. Explanation. 2. (Four points)Find two Treasury Regulations that relate to this topic. Read them and synthesize what you learned that wasn't in the IRC into one or two sentences. Cut and paste the relevant Treasury Regulations at the END of this document with enough detail so | can see that they are relevant. Property cited Treas. Reg. here. Property cited Treas. Reg. here. Explanation. 3. (Four points) Find two court cases that relate to this topic. Tell me what you learned from reading the court cases that wasn't in the IRC or the Treas. Regs. Cut and paste the relevant sections of the court cases at the END of this document with enough detail so | can see that they are relevant. Property cited court case here. Property cited court case here. Explanation. 4, (Five points) Are there any restrictions on yachts or boats that do not apply to cars or trucks? Include at least one new primary authority with your answer. Answer here with primary authority citation(s). 5. (Five points) Can Dinah and Oliver capitalize the purchase of the yacht and take normal depreciation expenses for it? Explain. Answer here. 6. (Four points) If Dinah and Oliver use the boat exclusively for business how does your answer to Q5 change? Answer here. 7. (Five points) Can Dinah and Oliver deduct the costs of insurance, gas, repairs, and other operating expenses as business deductions? Explain. Answer here. 8. (Five points) If Dinah and Oliver decide not to use the yacht in their business, is there any other way that they can get a tax benefit from it? Answer here. 9. (Four points) What is your recommendation to Dinah and Oliver. Write this as though you were responding directly to your clients {one or two paragraphs). Answer here. I will subtract 3 points for each one of these that is missing do not just cut and paste the title, include enough so we (my teaching assistant and 1) can evaluate if it is related or not: PASTE THE FOLLOWING BELOW IRCSECTION 1 IRC SECTION 2 TREAS. REG. 1 TREAS. REG. 2 COURT CASE 1 COURT CASE 2 ADDITIONAL PRIMARY AUTHORITY