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As the Carpenters? CPA, what advise can you offer them? Please be aware that you may never be paid for this service. Nonetheless, you should
As the Carpenters? CPA, what advise can you offer them? Please be aware that you may never be paid for this service. Nonetheless, you should prepare a technical memorandum for your files
Acctg 360 Research Problem Instructor: Shiva Moozoun In 2009, Larry and Mary Carpenter inherited $ 100,000 from Larry's uncle. Upon their cousin's recommendation, they invested the entire inheritance with Mr. Smart, principal owner and CEO of Smart & Safe Securities Inc. The returns were averaging between 15% ~ 19%. Needless to say, both Larry and Mary were ecstatic and they have invested more of their personal savings with Smart & Safe Securities Inc. On March 15, 2014, you received a frantic phone call from Larry. They have heard over the radio that Mr. Smart had misappropriated most of his clients' monies. Over the next couple of weeks, the true story gradually leaked out and you learned that in early June, the FBI had arrested and indicted Mr. Smart for running a Ponzi scheme and that he had stolen at least $100 million of his clients investments. You quickly pulled out the Carpenter's tax file and reviewed the history of their transactions: 2010 Original investment Investment Income reported $100,000 5,150 2011 Refinanced home for additional investment Investment Income reported 80,000 35,150 2012 Distribution in August for vacation Investment Income reported 10,000 37,020 2013 Investment Income reported 33,450 2014 Distribution in October for new SUV Investment Income reported 35,000 11,500 2015 January, refinanced home for additional investment 50,000 You calculated that taxes paid on investment income over the years were $ 29,344. You also noted their AGI and tax liabilities for years 2010 ~ 2014 were as follows: 2010 2011 2012 2013 2014 AGI Tax Liability $ 75,123 113,429 121,015 114,427 85,559 $ 9,766 17,014 19,046 18,521 8,556 Larry expects his 2015 AGI to be roughly the same as the previous year. He further confides in you that without the investment income from Smart & Safe Securities, he would not be able to pay his home mortgage, and he would be completely broke. As the Carpenters' CPA, what advise can you offer them? Please be aware that you may never be paid for this service. Nonetheless, you should prepare a technical memorandum for your filesStep by Step Solution
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