Accounting 3603 Project 2

You receive a call from an important client, Dwight Scarn, looking for tax advice. His spouse, Angela, owns a photography business and wants to buy a new car. She will use this car to drive to various locations to photograph clients. She is also considering using the car as her personal car and taking long road trips with Dwight so they can go on vacations. She thinks this is a great option because she will be able to take a business deduction for the car but use it as much as she wants for personal use. Your job is to research the potential tax consequences for the Scarns of buying a car and using it only for business purposes or using it for both business and personal uses. You should prepare a formal research memo and tax client letter describing the results of your research. If you don't remember how to prepare either one, see Chapter 2and the slides on Tax Research for an idea of how to format your memo and client letter. This assignment can be done in groups of up to 4 people and a copy of both your memo and client letter must be turned on Canvas by the beginning of class on Tuesday, Nov. 23. Keep in mind that the memo should be written in a way that somebody who has general tax and business knowledge, but is not a tax expert, can understand. Also, please make sure to include all of the authority (code sections, Treasury Regulations, court rulings, etc.) that lead you to your conclusions. On the other hand, the Scarns appreciate you explaining your findings and getting to your conclusions relatively quickly. Flowery introductions or language are unnecessary for this task and your memo and client letter should be no more than 4 pages each, double-spaced. Finally, if you choose to work on this project in a group, your memo needs to be coherent and read as if it was written by one person. If it is obvious that different group members wrote different parts of the memo because the language, tone, explanations, etc. differ across different sections of the memo the group will lose points for poor communication. This project is worth 35 points and will be graded on the quality of your analysis as well as on your writing (i.e., how effectively you communicate your findings and recommendations). Be as thorough as you can in considering all possibilities. Getting the right answer without providing proper support or failing to address significant questions the taxpayer has raised will result in a low grade on the assignment.

• Tax File Memorandum (research memo)
• Client Letter