Can you help me with the final milestone? It entails completing the applicable tax forms. I've attached the the the criteria for Milestone 4 as well as my submission for milestones 1, 2 and 3 (just to help you get an idea of what I submitted). Here's what I'm looking for in particular: "you will submit IRS draft tax forms, analyzing all of the critical elements in III. Appendix, sections A, B, and C. Based on your research, the taxforms and schedules will support your recommendation to the client. This assignment will be submitted as completed tax forms,"

Milestone One: Gross Income and Capital Gains I. Memorandum E. Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, broker's fees, closing costs, appraisals and surveys and the correct schedule form to complete. Capital gains or capital losses refer to the gain or loss which is realized on the disposal of capital property. A property that provides a long-term and enduring benefit to its owner(s) is considered capital property. As such, disposals of this type of property do not often occur over a taxpayer's lifetime. Properties that have potential for capital gains are those that are held for personal use and enjoyment, for investment purposes, or for the purpose of assisting in generating business activity. Calculating a capital gain or loss for tax purposes is a simple matter. However, tax treatment is a significant factor to consider when an investment in capital assets is being contemplated. It is important to recognize when a gain or loss on the sale or exchange of property is classified as a capital gain or loss as opposed to income or loss from business. Since neither the Internal Revenue Code nor the Treasury (Tax) Regulations provide specific guidelines, establishing if a transaction is a capital one can be very complex. The intended purpose of the property at the time of acquisition determines whether the taxpayer can classify its distribution as a capital transaction. If property is purchased with the sole purpose of resale, then the proceeds of the sale would result in a business income or loss, not a capital transaction. However, it the property is purchased with a long-term or \"enduring benefit\" then the proceeds of its sale or exchange would be considered a capital gain or loss. 1 The taxpayer would need to complete both a Schedule D (Form 1040) and Form 8949 to account for the sale of the capital asset. II. Conclusion D. Describe the after tax effects on the client's cash flow based on the sale of the land that is needed to provide the funds necessary to start the business. Consider including capital gains tax rules. If personally owned land is converted into a business use, then the fair market value of the property becomes the basis at the time of the conversion. The capital gain or loss on the disposition is calculated as follows: Proceeds of disposition Less: Adjusted cost basis $XXXX $XXX Expenses of disposition $XXX Net Capital Gain or Loss $XXX $XXXX Assuming the net capital gain is $8,550,000 (FMV less ADB and expenses of disposition) this would be the taxable amount. If we assume our taxpayer is in the 33% tax bracket, the tax rate for the long term capital gain would be 15%. E. Explain whether or not the client and his child should take a salary or cash distribution according to tax purposes and IRS code and regulations. Consider the type of business and the tax effect whether it is salary, dividends or cash withdrawal. If the business is a sole proprietorship or partnership, the owner(s) would take a draw. If the business is set up as a corporation, dividends are paid. However, if the owner works for the company he or she is considered an employee and is paid a salary. It is very 2 important when issuing salaries (or guaranteed payments) to owners that the compensation be in line with the degree of involvement in generating income, the type of work performed and the prevailing local rate of compensation for similar work and expertise. Salaries paid to owners are deducted before the corporate income tax is calculated which may assist in providing a larger deduction against the corporate income tax. Sources: https://www.law.cornell.edu/uscode/text/26/1202 https://www.irs.gov/pub/irs-pdf/f1040sd.pdf https://www.irs.gov/pub/irs-pdf/f8949.pdf http://biztaxlaw.about.com/od/glossaryd/g/ownersdraw.htm 3 I. Memorandum A. Recommend a type of business entity for the client to consider based on your tax research. Consider justifying your recommendation using the code and regulations that relate to the business entity. As stated by the IRS, (2015) \"A sole proprietor is someone who owns an unincorporated business by himself or herself.\" This is the recommended business structure for the client, Bob Jones. One advantage for organizing the business as a sole proprietorship is that it is a pass through entity, meaning it is not taxable. All business income is passed onto the owner and treated as his or her personal income. Unlike with a C corporation structure, which is taxed at the business level and also taxed at the shareholder level, a sole proprietorship avoids this double taxation event. Sole proprietors can deduct ordinary and necessary expenses; health insurance, equipment, charitable contributions, entertainment, travel, capital assets and meals. The ability to deduct half of the self-employment taxes is an added advantage to this structure. Also, as long as the business has stringent record keeping and audit reports, qualified expenses are fully deductible. (Turbo Tax 2015). These deductions have the ability to greatly reduce the taxable income. F. Justify whether or not the client should choose a business entity that has limited liability protection. Be sure to include possible future liability issues based on the potential economic impact and appropriate IRS code and regulations. Limited liability companies are recognized by the IRS as either partnerships or corporations. If a company is organized as an LLC, the member's personal assets are provided some measure of protection against litigation. To be classified as a corporation, the owner would need to select that classification on \"check-the-box regulations\" as specified in Regulations 1 Sections 301.7701-1 through 4. An LLC designation would not be a suitable business structure in this case as all of the owner's assets are liable to the business' debts. (GO-Biz, 2012). The IRS, (2015) clarifies that an entity with one owner is subject to unlimited liability as legally the business and owner are one and the same. The future liability effect of a sole proprietorship is continuous given the fact that the owner is provided the maximum benefits of the business. Therefore, the nature of unlimited liability of a sole proprietorship should be alleviated by the remuneration afforded by this type of business structure. It is also important to note that although a corporation or LLC is established to provide limited liability, courts may (and have) hold shareholders legally responsible for a company's debt. G. Describe the tax effect on the recommended business entity and the impact it will have on the client's personal tax return. Consider addressing how the business entity affects the completion of the 1040 tax form. A sole proprietor is required to report all profits, losses and expenses on his or her Forms 1040 and Schedule C to ascertain the appropriate income tax. In addition to this, a Schedule SE (Form 1040) must be completed to record self-employment tax. However, a 50% deduction of this is tax is allowable by the IRS (2015). Estimated taxes should be reported on Form 1040-ES. One disadvantage as described by Sara Hill in How Sole Proprietors are Taxed, is that sole proprietors usually pay higher taxes than corporations, generally 25% as opposed to the corporate 15%. II. Conclusion A. Evaluate the economic impact on the client's personal returns based on the recommended entity. Justify why the client would not choose the other business entities by informing the client of the differences. 2 As discussed in Walters Kluwer (2015) Federal taxes; Sole Proprietorship simplicity is the primary advantage of sole proprietorship. Due to the nature of a sole proprietorship, the economic impact to the owner's personal return should be a fair amount of after-tax income and avoidance of double taxation. Partnerships, S corporations and C corporations would all involve profit sharing among the other members or owners. This would of course, reduce the after tax profit afforded to each member. Tax reporting for sole proprietors would be a fairly expedient process providing the records and supporting documentation are in good standing. Another difference between the sole proprietor and other business structures would be the applicable tax rates. While corporations generally have lower tax rates, the after-tax income is also reduced as it is divided among all the shareholders. B. Justify your recommendation regarding the client's daughter having an ownership interest. Provide details supporting the recommendation taking into consideration the jargon and mechanics of the transaction. The IRS requires owners of sole proprietorships report all income on his or her personal return. Failure to do so would entail fees and fines. If the client's daughter were to retain ownership interest, the amount she received would be taxable to her and included on her personal returns. This would in effect create a kind of double taxation, since the business entity is not a partnership. An alternate option would be for the client to have an indirect transfer of ownership interest to the daughter. Funds therefore would be transferred after-tax, if they were for instance conveyed as a revocable trust with a spendthrift clause. This type of trust would prevent the beneficiary from transferring rights in the trust as well as protecting the interest from any creditors of the beneficiary. 3 Sources: Retrieved from: http://smallbusiness.chron.com/limited-vs-unlimited-liability-companies-68397.html Retrieved from: http://www.hfw.com/Piercing-the-Corporate-Veil-Dec-2012 Sara Hill, (2015). How Sole Proprietors are Taxed Retrieved from: http://www.nolo.com/legal-encyclopedia/how-sole-proprietors-are-taxed30292.html GO-Biz, (2012). Limited Liability Company Retrieved from: www.business.ca.gov/StartaBusiness/DefiningaBusiness/LimitedLiabilityCompanyLLC.aspx TurboTax, (2015). Tax Tips for sole proprietors. Retrieved from: https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Tax-Tips-for-SoleProprietors/INF2258.html Walters Kluwer, (2015). Federal taxes; Sole proprietorships. Retrieved from www.bizfilings.com/toolkit/sbg/tax-info/fed-taxes/sle-proprietorships-arent-tax-entities.aspx Retrieved from: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/SoleProprietorships IRC 301.7701-1 through 4 Retrieved from: http://www.bizfilings.com/toolkit/sbg/run-a-business/assets/using-trusts-to-protectassets.aspx 4 Milestone Two: Revenue Recognition and Accounting Methods A. Differentiate between accrual accounting and cash basis. Based on the type of business and the client's accounting system, what is the impact when revenue is recognized? Which option would you recommend for the client? When using the accrual accounting method, revenue is recognized when the service or goods have been earned. That is not to say the payment for goods or services has yet been received. Expenses, too are recognized when they occur, not necessarily when payment is made. A journal entry is made to accrue or record the revenue on the sale of goods or services, again, even if payment has not been made. However, if goods are sold and remain undelivered, the transaction is not considered complete and revenue has not been earned. If this is the case, an accrual entry for revenue is not entered until the goods are delivered. Under the cash method of accounting revenue and expenses are recognized when cash is exchanged. If a seller is using the cash method, revenue on the sale is not recognized until payment is collected. As with revenues, expenses are recognized and recorded when cash is paid. The accrual basis gives a more realistic idea of income and expenses during a period of time, therefore providing a long-term picture of the business that cash accounting does not provide. However, accrual accounting lacks an awareness of cash flow; a business can appear to be very profitable while in reality it is not. I would suggest, though the client utilize the accrual method of accounting. This would allow the client to recognize revenue and expenses in the tax year in which they occur. This accounting method is also the one dictated by Treasury Reg. 1.471-1. B. Based on the decision of accrual vs. cash basis, describe when revenue would be recognized on the sale of inventory, and how the accrual reporting differs from cash basis. Page 1 Milestone Two: Revenue Recognition and Accounting Methods Since the client will be using the accrual method of accounting, revenue would be recognized when it is earned (not necessarily when received). Revenue is earned when the inventory is delivered or in some instances in transit. Although the client is not using the cash basis accounting system, when this method is used, revenue is recognized after the delivery of the goods and the payment has been received. Revenues are reported on the income statement when they are earned when utilizing the accrual method of accounting. The earning of revenue often takes place prior to any payment actually being received from the customer. Expenses are reported on an income statement in the period in which they occur which differs from when payment is made. Cash basis accounting reports revenues on the income statement when the payment is received from the customer. Expenses are reported when the cash is paid out. C. Determine the economic impact on the client's financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate IRS code and regulations. One advantage of the sole proprietorship form of business is that the owner gets all the profits derived from the operations. The second advantage is that he makes his own risks. Another advantage is that they might get free labor from family members. According to the IRS, the sole proprietor is not taxed twice as his revenue is treated as business income. If he therefore makes profits, he would get to enjoy maximum benefits and evade any chances of incurring instances of double taxation. The economic impact therefore is that sole proprietors get to enjoy all the profits by themselves and the tax rules are lenient on them. According to the IRS, Publication 334 sole proprietorships are not separate legal entities, and a sole proprietor is someone who owns an unincorporated business all by himself. The liability therefore Page 2 Milestone Two: Revenue Recognition and Accounting Methods of a sole proprietor is very high. Their property is liable to the business. They must represent all their earnings for taxation and if there are omissions, there are due consequences. D. Summarize, using moral reasoning, the cash or accrual accounting method in relation to the selected business entity. There are two methods of recording transactions under sole proprietorship. The IRS itself has identified cash basis and accrual method. Cash method is the commonly used method by sole proprietors as it's easy to use, but it can be used for services. David Rodeck, (n.d) described cash method as the method used in recognizing payments when they are received and not when the service is performed. On the other hand, accrual method records revenue when the transaction of selling the good is complete, even if there are some undue payments. In case, of inventories or merchandize, the accrual method of accounting is commonly used. The accrual method has been described by many as a method that may require hiring experts which again would be costly. So many sole proprietors prefer this method over accrual basis. However, since the client will be utilizing inventory accounts, the accrual method of accounting must be used. This argument is strengthened by \"Treas. Reg. 1.446-1(c) (2) (i) (1957) states that "[i]n any case in which it is necessary to use an inventory the accrual method of accounting must be used with regard to purchases and sales unless otherwise authorized under subdivision (ii) of this subparagraph." It is through the interaction of these provisions that this taxpayer was compelled to report its income on the accrual basis.\" Source: Treasury Reg. 1.471-1 Page 3 Milestone Two: Revenue Recognition and Accounting Methods Retrieved from: http://www.fasb.org/resources/ccurl/792/293/CON6.pdf David Rodeck, (n.d). The accounting methods for sole proprietorship and cash accrual. Demand Media. Retrieved from smallbusiness.chron.com/accounting-methods-soleproprietorship-cash-accrual-20550.html. IRS, (2014). Accounting methods; Accounting periods and methods. Retrieved from www.irs.gov/publications/p334/ch02.html IRS, (2014). Sole proprietor. Introductory Material Publication 334. Retrieved from www.irs.gov/publication/334/ar01.html Robbert Jennings, (2001). Cash or accrual? Journal of Accountancy. Retrieved from www.journalaccountancy.com/issues/2001/may/cashoraccrual.html Retrieved from: http://openjurist.org/420f/2d/352/wilkinson-beane-in-v-commissioner-ofInternal-revenue https://www.boundless.com/accounting/textbooks/boundless-accounting-texbook/detailedreview-of-the-income-statement-13/revenue-recognition-85/the-importance-oftiming-revenue-and-expense-recognition-385-709/ Page 4 TAX 650 Final Project Guidelines and Rubric Overview The final project for this course is the creation of a memorandum with appendix (7-10 pages). As an associate working in a privately held enterprise or working with privately held clients, it is imperative to be able to advise clients on the tax implications of their financial investments. The ability to model the tax consequences of transactions and do cost benefit analysis is crucial. For your final project, you will model the role of an associate working in a private consulting firm. You will demonstrate your ability to advise clients on whether they should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. Additionally, using your tax research skills and understanding of federal income taxation, you will have the opportunity to evaluate tax consequences from sales and distributions for their compliance with the Internal Revenue Code and Treasury regulations. The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, Seven, and Eight. The final product will be submitted in Module Nine. In this assignment, you will demonstrate your mastery of the following course outcomes: Recommend an appropriate business tax entity based on the analysis of a tax situation for achieving favorable economic impact on the client's taxable income Utilize appropriate tax forms and schedules that compute taxable income on individual tax returns and reflect versatility of thought, resulting in the best economic solution for the individual taxpayer Apply accrual and cash basis accounting best practices and moral reasoning in determining when business transactions may be reported for income tax purposes Assess the economic impact on taxable income for the business tax entity in relation to Internal Revenue Code and Treasury regulations and the optimum desired outcomes for the client Evaluate the tax consequences that result from sales or distributions of property for their compliance with IRS Circular 230, Internal Revenue Code , and the American Institute for Certified Public Accountants and for advising the client Prompt You are currently working at a mid-sized certified public accounting firm. Your client is Bob Jones. Bob, age 60 and single, has recently retired from IBM. He has $690,000 available in his 401(k) fund and he is thinking of using that money to open a used car business that will be located at 210 Ocean View Drive in Pensacola, Florida. Bob has estimated that the business might make $300,000 in taxable income. Bob's personal wealth including investments in land, stocks, and bonds is about $14,000,000. He reported an interest income o f $20,000 and dividend income of $6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000. Bob has hired your firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. He is also considering transferring a possible 40% interest in his new business to his daughter Mandy, age 23 and single. Prepare a memorandum to the client, recommending a type of business entity, including an appendix of supporting IRS tax schedules and forms. Specifically, the following critical elements must be addressed: I. Memorandum A. Recommend a type of business entity for the client to consider based on your tax research. Consider justifying your recommendation using the code and regulations that relate to the business entity. B. Differentiate between accrual accounting and cash basis. Based on the type of business and the client's accounting system, what is the impact when revenue is recognized? C. Based on the decision of accrual vs. cash basis, describe when revenue would be recognized on the sale of inventory, and how the accrual reporting differs from cash basis. D. Determine the economic impact on the client's financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate IRS code and regulations. E. Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, broker's fees, closing costs, appraisals, and surveys and the correct schedule form to complete. F. Justify whether or not the client should choose a business entity that has limited liability protection. Be sure to include possible future liability issues based on the potential economic impact and appropriate IRS code and regulations. G. Describe the tax effect on the recommended business entity and the impact it will have on the client's personal tax return. Consider addressing how the business entity affects the completion of the 1040 tax form. II. Conclusion A. Evaluate the economic impact on the client's personal returns based on the recommended entity. Justify why the client would not choose the other business entities by informing the client of the differences. B. Justify your recommendation regarding the client's daughter having an ownership interest. Provide details supporting the recommendation taking into consideration the jargon and mechanics of the transaction. C. Summarize, using moral reasoning, cash or accrual basis accounting systems in relation to the selected business entity. Consider how the accounting system impacts revenue recognition, consistent with IRS code and regulations. D. Describe the after tax effects on the client's cash flow based on the sale of the land that is needed to provide the funds necessary to start the business. Consider including capital gains tax rules. E. Explain whether or not the client and his child should take a salary or cash distribution according to tax purposes and IRS code and regulations. Consider the type of business and the tax effect whether it is salary, dividends, or cash withdrawal. III. Appendix Based on your recommendation to the client regarding proprietorship, taxable income, and sale of land, complete the appropriate tax schedules and forms described below. A. Prepare the appropriate page of Form 1040 and include the sale of the client's land on the appropriate tax schedule and form for the recommended business entity. Be certain to complete each tax schedule and form accurately and completely. B. Prepare the appropriate schedule and tax forms to reflect taxable income based on your calculations and the disposition of asset. Be certain to complete each tax schedule and form accurately and completely. C. Illustrate how creative problem solving and versatility of thought impact professional advice that you intended to result in the best economic solutions for the client. Consider providing real-world examples to support your claims. Milestones Milestone One: Gross Income and Capital Gains In Module Three, you will submit a draft of the gross income and capital gains, analyzing the following critical elements: I. Memorandum, section E, and II. Conclusion, sections D and E. You must compute the property disposition capital gain and taxation of gross income. In completing this assignment, consider the tax effect of salary dividends or cash withdrawal in accordance with IRS code and regulations. This assignment will be submitted as a Word document. This milestone is graded with the Milestone One Rubric. Milestone Two: Revenue Recognition and Accounting Methods In Module Five, you will submit a draft of the revenue recognition and accounting methods, summarizing the following critical elements: I. Memorandum, sections B, C, and D, and II. Conclusion, section C. You will determine revenue recognition and the economic impact of the client's financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate IRS code and regulations. This assignment will be submitted as a Word document. This milestone is graded with the Milestone Two Rubric. Milestone Three: Choice of Business Entity In Module Seven, you will submit a draft of the choice of business entity, analyzing the following critical elements: I. Memorandum, sections A, F, and G, and II. Conclusion, sections A and B. The short paper will communicate tax aspects of business entities to the client. This assignment will be submitted as a Word document. This milestone is graded with the Milestone Three Rubric. Milestone Four: Tax Forms In Module Eight, you will submit IRS draft tax forms, analyzing all of the critical elements in III. Appendix, sections A, B, and C. Based on your research, the tax forms and schedules will support your recommendation to the client. This assignment will be submitted as completed tax forms, which are provided to you in your textbook resource CD or on the IRS website. This milestone is graded with the Milestone Four Rubric. Final Submission: Memorandum With Appendix In Module Nine, you will submit a memorandum with an appendix to the client and all IRS tax forms and schedules necessary to support your advice. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission is graded with the Final Product Rubric. Deliverables Milestone One Two Deliverable Gross Income and Capital Gains Module Due Three Grading Graded separately; Milestone One Rubric Five Graded separately; Milestone Two Rubric Three Revenue Recognition and Accounting Methods Choice of Business Entity Seven Graded separately; Milestone Three Rubric Four Tax Forms Eight Graded separately; Milestone Four Rubric Final Submission: Memorandum With Appendix Nine Graded separately; Final Product Rubric Final Product Rubric Guidelines for Submission: Your memorandum must be 7 to 10 pages in length (plus a cover page and references) and must be written in APA format. Use double spacing, 12-point Times New Roman font, and one-inch margins. Your memorandum must include an appendix containing electronic versions of the appropriate IRS tax schedules and forms. Include at least three references cited in APA format. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Memo: Business Entity Exemplary Meets \"Proficient\" criteria and details are justified using appropriate IRS code and regulations relevant to recommended business entity (100%) Proficient Recommends a type of business entity for the client to consider that is based on tax research (90%) Needs Improvement Recommends a type of business entity but either the cited IRS code and regulations are inaccurate or details are cursory (70%) Not Evident Does not recommend a type of business entity (0%) Value 6.4 Memo: Accrual Accounting vs. Cash Basis Meets \"Proficient\" criteria and provides a full description of which entities require accrual and when it is optional (100%) Differentiates between accrual accounting and cash basis and identifies the impact of the revenue (90%) Memo: Revenue Recognized on the Sale Meets \"Proficient\" criteria and describes the installment method of reporting revenue (100%) Memo: Economic Impact Meets \"Proficient\" criteria and addresses payroll tax issues and self-employment tax (100%) Memo: Tax Consequences Meets \"Proficient\" criteria and comprehensively addresses all expenses including how best to report on the schedule (100%) Meets \"Proficient\" criteria and includes information about limited liability companies (100%) Describes when revenue would be recognized and how the reporting differs for accrual accounting vs. cash basis (90%) Determines the economic impact on the client's financial situation and potential tax liability, and determinations are consistent with IRS code and regulations (90%) Identifies the tax consequences on the sale or exchange of the land consistent with capital gains rules (90%) Justifies whether or not the client should choose a business entity that has limited liability protection and includes possible future liability issues consistent with IRS code and regulations (90%) Memo: Limited Liability Protection Memo: Tax Effect Meets \"Proficient\" criteria and addresses the client's after tax flow (100%) Describes the tax effect on the recommended business entity and the impact on the client's personal tax return (90%) Differentiates between accrual accounting and cash basis and identifies the impact of the revenue, but the details are inaccurate or cursory (70%) Describes when revenue would be recognized and how the reporting differs but details are inaccurate or cursory (70%) Determines the economic impact on the financial situation and potential tax liability but either the referenced IRS code and regulations are inaccurate or details are cursory (70%) Identifies tax consequences but details are either inconsistent with capital gains rules or cursory (70%) Justifies whether or not to choose a business entity that has limited liability protection but does not include possible future liability issues, possible future liability issues are not consistent with IRS code and regulations, or details are either inaccurate or cursory (70%) Describes the tax effect on the recommended business entity and the impact on the client's personal tax return, but details are irrelevant or cursory (70%) Does not differentiate between accrual accounting and cash basis or does not identify the impact of the revenue (0%) 6.4 Does not describe when revenue would be recognized or how the reporting differs (0%) 6.4 Does not determine the economic impact on the financial situation and potential tax liability (0%) 6.4 Does not identify tax consequences (0%) 6.4 Does not justify whether or not to choose a business entity that has limited liability protection (0%) 6.4 Does not describe the tax effect on the recommended business entity and the impact on the client's personal tax return (0%) 6.4 Conclusion: Economic Impact: Personal Returns Meets \"Proficient\" criteria and shows keen insight into the advantages and disadvantages of choosing appropriate business entities (100%) Conclusion: Ownership Interest Meets \"Proficient\" criteria and uses appropriate voice for the audience (100%) Conclusion: Cash or Accrual Basis Accounting System Meets \"Proficient\" criteria and identifies the impact on revenue recognition consistent with IRS code and regulations (100%) Conclusion: Tax Effects on Cash Flow Meets \"Proficient\" criteria and cites capital gains tax rules relating to gains and losses (100%) Conclusion: Salary or Cash Distribution Meets \"Proficient\" criteria and includes the tax effect on salary, dividends, or cash withdrawal (100%) Appendix: Form 1040 Evaluates the economic impact on the client's personal returns based on the recommended entity and justifies response by including information about the other entities (90%) Justifies recommendation regarding the client's daughter having an ownership interest using details supporting the recommendation (90%) Summarizes, using moral reasoning, cash or accrual basis accounting systems in relation to the selected business entity consistent with appropriate IRS code and regulations (90%) Describes the after tax effects on the client's cash flow based on the sale of the land that is needed to start the business (90%) Explains whether or not the client and his child should take a salary or cash distribution according to tax purposes and IRS code and regulations (90%) Prepares the appropriate page of Form 1040 accurately and completely, including the sale of the client's land on the appropriate tax form and schedule (100%) Evaluates the economic impact of client's personal returns but does not provide justification or details lack relevance or are cursory (70%) Does not evaluate the economic impact of client's personal returns (0%) 6.4 Justifies recommendation regarding client's daughter having an ownership interest but details either lack relevance or are cursory (70%) Summarizes cash or accrual basis accounting systems in relation to the selected business entity, but details either lack moral reasoning or are cursory (70%) Does not justify the recommendation regarding client's daughter having ownership interest (0%) 6.4 Does not summarize cash or accrual basis accounting systems in relation to the selected business entity (0%) 6.4 Describes the after tax effects on the client's cash flow that are needed to start the business but details are either inaccurate or cursory (70%) Explains whether or not the client and his child should take a salary or cash distribution but details are cursory or not consistent with tax purposes and IRS code and regulations (70%) Prepares the appropriate page of Form 1040 on the appropriate tax form and schedule, but details are either incomplete or inaccurate (70%) Does not describe the after tax effects on the client's cash flow that are needed to start the business (0%) 6.4 Does not explain whether or not the client and his child should take a salary or cash distribution (0%) 6.4 Does not complete the appropriate page of Form 1040 and does not include the sale of the client's land on the appropriate tax form and schedule (0%) 6.4 Appendix: Schedule and Tax Form Appendix: Professional Advice Meets \"Proficient\" and provides real-world examples to support claims (100%) Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format (100%) Prepares the appropriate schedule and tax form accurately and completely, reflecting taxable income based on calculations and the disposition of asset (100%) Illustrates how creative problem solving and versatility of thought impacts professional advice intended to result in the best economic solutions for the client (90%) Submission has no major errors related to citations, grammar, spelling, syntax, or organization (90%) Prepares the appropriate schedule and tax form reflecting taxable income but details are incomplete or inaccurate (70%) Does not prepare the appropriate tax form reflecting taxable income (0%) 6.4 Illustrates how creative problem solving and versatility of thought impacts professional advice intended to result in the best economic solutions for the client but details are irrelevant or cursory (70%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (70%) Does not illustrate how creative problem solving and versatility of thought impacts professional advice intended to result in the best economic solution for the client (0%) 6.4 Submission has criti cal errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas (0%) 4 Earned Total 100%