Assignment 1: Tax Research Assignment

DO NOT CONTACT ME OUTSIDE OF THIS FORUM

This tax research project is a capstone assignment, designed to test your ability to apply the tax research techniques learned throughout this course. In 57 pages (double-spaced), you must address each of the following cases:

Research Case 11-21 (p. 429)

Research Case 11-22 (p. 429)

Research Case 11-37 (p. 431)

Advanced Case 11-38 (p. 431)

Advanced Case 11-43 (p. 432)

IMPORTANT: These cases are NOT to be addressed in tax file memo format. This should be a 57 page document in APA format. For ease of reading, please place a distinct header at the beginning of each section that details the case that you are preparing to analyze. A reference list is not required, however, you must properly cite all laws, regulations, and rulings according to the formats presented in the text. You should use appropriate laws, regulations, and rulings to support all analysis and conclusions. This is not an opinion assignment, but an assignment based on fact.

21. Pete is an engineering professor at State University. Under his contract, Petes inventions while employed at the university are the property of the Board of Regents, but Pete receives an addition to his salary equal to one-third of the royalties received by the university on his patents. This year, Pete received $ 75,000 on top of his salary, as royalties allocated to him. Does Pete recognize this amount as ordinary income or capital gain?

22. Dean and Robin owned a family business, each holding the shares as community property. When they were divorced in 2011, the court did not force them to split the shares, citing damage to the business that could occur if the public learned that ownership of the enterprise was changing. Now it is 2014, and Robin wants to remarry. She and her new husband want to have the business retitle one-half of the shares in Robins name only. The original divorce court agrees in 2014. Is this transfer subject to income tax? Is it subject to gift tax?

37. Chico is a corporation operating in several states on the accrual basis. Chico received a state income tax refund this year (Year 4) based on the following sequence of events. In which tax year does Chico recognize the refund as gross income? Year 1: Generated the operating loss. Year 2: Filed the loss carryback form with the state. Year 3: Received notice that the refund was approved. Year 4: Received the refund check.

38. After her employer transferred her to another town, Rosemary put her house up for sale. After two years of Internet listings, open houses, repairs, and price cuts, a buyer finally came along. By this time, the house had sat empty for 25 months before the closing occurred, and Rosemary rented it out just to help with the mortgage payments. Rosemary claimed a $40,000 business loss with respect to the house. Do you agree with this filing position?

43. A local law firm recently remodeled its offices. In addition to new office furniture and computers, the company purchased six large paintings from a local art gallery. These paintings are more than 100 years old and cost more than $100,000. The paintings are on display in the offices alongside more recent paintings by lesser-known artists. Are the paintings depreciable for tax purposes?