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PwC Case Studies in Taxation, 2013, PwC, LLP HAWAIIAN MEMORIES, INC. Hawaiian Memories, Inc. (HMI) is a C corporation that was formed in 2007 in Maui. The company markets specialty tourism products of the islands of Hawaii. The initial incorporators were Angie Lee and Bob Lin, who now own 1,000 shares of voting common stock and 100 shares of preferred stock each. The company has eight employees who collectively own 500 shares of nonvoting stock. Most of the employees have worked for the company for several years. They purchased the stock when the company offered it at the end of each year. Two own 100 shares each; the other six own 50 shares each. None of the shareholders are related to each other by blood or marriage, except for Angie and Bob. All individual shareholders are native Hawaiians except for Inge; she is Swedish and has lived on Maui and worked for HMI for three years. Inge plans to move back to Sweden in one year and try to develop markets for HMI products there. Another stockholder is the Plantation Sugar Partnership (PSP). PSP owns 500 nonvoting common shares; it supplies raw sugar in bulk to HMI. Bob Lin and his sister Katie each own 50% of PSP. The corporation uses a June 30 year end. The year was chosen arbitrarily. All of the HMI shareholders use calendar years. Financial statements for the year ended June 30, 2012 are attached. HMI does not expect that it will generate any significant increases in investment or passive activity income in the coming years. This was the first year of corporate operating losses in some time. The corporation elected not to carry back the losses because the tax rate paid in those years was lower than they expect to pay in the future. Bob and Angie expect one or two more years of losses and then steady increases in net income. Bob lives in Hawaii and manages operations there. Angie moved to San Francisco in 2008 to develop mainland markets for their products. Both earn annual salaries of $150,000. The shareholders and all employees are provided accident and health insurance. The company contributes 10% of each employee's salary to a defined contribution pension plan each year. PART I On October 1, 2012, Bob and Angie came to your office for the first time. They have just filed the corporate return for the fiscal year ended June 30, 2012 and are interested in having you take over all the future tax work for the corporation. They inform you that they have just read an article in Tourism Retailing about the tax and cash-flow benefits of pass-through losses. They have filed an election to be an S corporation, effective on July 1, 2012. Bob and Angie signed the consent for the S election because they were the only shareholders with voting stock. Their reasoning for making the S election is that they expect losses for a year or two as they try to expand, and they would like to use the losses already incurred as well as the prospective losses against their other income. Review all relevant information and identify any issues related to conversion to S status. Advise Bob and Angie about the conversion to S status. Page 1 of 4 PwC Case Studies in Taxation, 2013, PwC, LLP HAWAIIAN MEMORIES, INC. PART II Now instead assume the following: Memories' conversion to S status was made, effective for the taxable year beginning July 1, 2013. HMI had wanted to keep its fiscal year, but it could not document significant seasonality. So the first S tax return will be for six months, reflecting the new calendar tax year. A C corporation return was filed for the fiscal year ending June 30, 2013. That return showed a zero taxable income for current year operations. The balance sheet for June 30, 2013 only differs from the June 30, 2012 statement as presented by $40,000 additional depreciation deductions claimed. HMI plans to sell the investment land in 2014 to raise some cash, because Bob and Angie feel that the appreciation potential in the land will have flattened by then. They expect the property to be worth about $1,000,000 in 2014. Angie and Bob anticipate that there will be net tax losses from operations of $200,000 during the six-month period ending December 31, 2013 and $150,000 in calendar year 2014, without consideration of the land sale. Convey to HMI the tax effects of such a 2013 conversion to S status. Provide a restated HMI balance sheet as of June 30, 2013, and compute the passthrough to the shareholders for the 2014 HMI calendar year. Page 2 of 4 PwC Case Studies in Taxation, 2013, PwC, LLP HAWAIIAN MEMORIES, INC. Hawaiian Memories, Inc. Book/Tax Balance Sheet June 30, 2012 Notes The difference between FIFO and LIFO is expected to be approximately the same for the next year. The entire layer of inventory on hand at conversion will be sold by December 31, 2013. Memories' balance in Earnings and Profits is $300,000. Current E&P for the year ended June 30, 2013 was $0. Page 3 of 4 PwC Case Studies in Taxation, 2013, PwC, LLP HAWAIIAN MEMORIES, INC. Hawaiian Memories, Inc. Book and Tax Income Statement for the 12 months ending June 30, 2012 Neeley Services Group. Keep these in mind as you work this case. Start by determining the Amount Realized for each of the three payments. How is the debt relief treated for this purpose? Now compute the Gain Realized with each payment received. What is Carole's interest basis at the end of Year One? For the total of the cash payments to Carole, how much is designated a 736(b) payment? A 736(a) payment? Remember that Neeley is classified as a service partnership - its asset holdings are not so capitalintensive as to find otherwise. Its greatest financial asset is its guaranteed cash flow from the service contracts. Now find the amounts of capital and ordinary income that Carole recognizes with each payment. A Attach your Word or Excel compatible document here. Page 4 of 4 PwC Case Studies in Taxation William A Raabe, The Ohio State University Index of Cases 2012 Edition Distribution Access to an index to the cases and supporting material is available at all times at the editor's web site. An instructor obtains copies of the related files through a request to the editor. Professors hereby are granted PwC's permission to distribute hard copy or electronic versions of the cases to students or other interested parties. Solution files are property of PwC and must be held in the strictest confidence by professors. PwC does not grant permission for any duplication or distribution of solution or supporting files in any format, without the editor's explicit written permission. Name of Case Accounting for Income Tax Edgewood Accounting for Income Tax Estabrook Primary Tax Topics(s) Discussed in Case In this case study, a US corporation applies ASC 740 / FAS 109 rules to compute its tax accruals and payables. Students perform all the steps to derive the financial statement tax accounts and footnotes. Students compute book income before taxes, identify booktax differences and classify each as to temporary or permanent, compute federal and state income taxes, and complete the ASC 740 / FAS 109 journal entry. The taxfootnote income tax rate reconciliation is optional. This advanced case develops the issues found in the Edgewood case and adds ASC 74010 / FIN 48 to the mix. In this case study, a US corporation applies ASC 740 / FAS 109 and ASC 74010 / FIN 48 to compute its tax accruals and payables. Students perform all the steps to derive the financial statement tax accounts and footnotes. Students compute book income before taxes, identify booktax differences and classify each as to temporary or permanent, compute federal and state income taxes, analyze several uncertain tax positions, and complete the ASC 740 / FAS 109 journal entry. The taxfootnote income tax rate reconciliation is optional. Completion of the related Schedule M3 also can be assigned. Year Case Added to Collection 2007 2007 Name of Case Accounting for Income Tax Extra Accounting for Income Tax - Wood Group Accounting for Income Tax Wylie Accounting for Income Tax - Yost Partnership CCorporation - Axle CCorporation - Carlstrom Products CCorporation - Eaton Graphics CCorporation Grunwald CCorporation - Wheeler Electrical 2 Primary Tax Topics(s) Discussed in Case An entrylevel case involving the financial reporting of the income tax provision. The provision amount is computed using trial balance data. Students first classify permanent and temporary differences between book and taxable income, including an identification of the current and noncurrent amounts. The solution discusses the IFRS treatment of income tax deferrals. A compliance oriented view of booktax differences. A federal consolidated group files a Schedule M3 for its operating results. Students must analyze a series of transactions, perform intercompany eliminations, and complete Schedule M3 for the consolidated group. A compliance oriented view of booktax differences. A US C corporation prepares a Schedule UTP with respect to disclosures of certain of its tax positions. Students analyze the GAAP tax deferrals and adjustments, in preparing the schedule using the taxpayer's data. A compliance oriented view of booktax differences. A US partnership files a Schedule M3 for its operating results. Students must determine whether the partnership must file a Schedule M3 with its Form 1065. Then they analyze a series of transactions and complete Schedule M3 for the entity. An investor wishes to take over only one of the ongoing businesses of the client. The student must weigh the pros and cons of the alternative forms that such a reorganization/liquidation could take. Considerations include the current gain/loss to the parties, and the investor's access to carryover tax attributes. This case study concerns the acquisition by one corporation of a previously unrelated target corporation through a triangular merger. The primary issue is the qualification of the acquisition as a nontaxable reorganization. The acquired corporation has net operating loss carryforwards and owns several assets, the values of which are substantially below their adjusted tax bases. Consequently, the case also requires an analysis of IRC 382 as it applies to the acquisition. This case study focuses on the tax consequences of an IRC 332 liquidation of a controlled subsidiary to (1) the controlling parent, (2) the subsidiary, and (3) a minority shareholder. It also raises issues concerning the treatment of net operating losses as a subsidiary in a consolidated group. Finally, the case requires the student to apply the SRLY rules for both the loss subsidiary and its successor entity. A private equity fund wants to acquire one of the two operating divisions of a US corporation. A spinoff transaction is devised, involving significant amounts of cash that may be received by the corporation's shareholders. Students determine whether the steps in the proposed restructuring qualify for taxdeferred treatment. They compare the proposed result to the tax consequences of a taxable sale of the division. This case study examines the tax consequences to an individual shareholder of the liquidation of an insolvent subsidiary. It requires the application of the IRC 108 rules on forgiveness of indebtedness and the 336 rules on gain or loss recognition to a liquidating corporation. The case also reviews the differing tax consequences of recourse and nonrecourse corporate debt assumed by a shareholder who receives assets in liquidation. Year Case Added to Collection 2008 2007 2011 2008 2008 Prior to 2005 Prior to 2005 2012 Prior to 2005 Name of Case Corporate AMT Chosen Exempt Orgs Northside Mission Exempt Orgs - Tait College Family Tax Planning - Benoit Family Family Tax Planning - Lopez Trust Family Tax Planning - Moore Family Family Tax Planning - Pyle Family International Tax - Beamon International Tax Orange International Tax - Williams Primary Tax Topics(s) Discussed in Case This case study focuses on the alternative minimum tax for C corporations. Students calculate the regular tax and the AMT. Comments are required after making the computations, for instance, as to an unused general business credit, the minimum tax credit carryforward, and the effects on estimated tax payments. This case focuses on the public support tests under 509(a)(1) and (a)(2). Students must determine whether the organization is a public foundation. This case study examines the unrelated business income tax rules. Students must analyze specific examples of activities that may potentially generate unrelated business taxable income for the college. This case study examines the alternatives that are available when an individual dies while holding a positive balance in a traditional IRA. Requirements and elections are examined as to the minimum distributions that are required of the surviving beneficiary. A complex trust makes distributions and retains some entity accounting income, so it incurs a tax liability. The student must follow the sequence of income computations to determine the entity and beneficiary share of accounting income, and related tax effects. This case study concerns the family tax planning goals of a highly compensated corporate executive with three grown adult children and three minor grandchildren. In solving this case study, students must analyze both the income and transfer tax consequences of direct and indirect gifts of developed and undeveloped real estate. Recent trends in Family Limited Partnerships are explored in this case. Secondary issues include the tax consequences of charitable contributions of appreciated capital gains property and the role of life insurance in a family tax plan. The founder of a closely held business wants to retire and pass the corporation and other investments to various family members. Consideration is given to the financial and other goals of the family, and various means by which to reduce transfer taxes. Students derive and diagram ideas for the family tax plan. A US corporation holds sizable foreign tax credit carryforwards and needs to use them up before the credits expire. The student analyzes sourcing rules for the entity's income and deduction items so as to best manage the credit carryover. This case study addresses various provisions of the Code applicable to US taxpayers with overseas operations. The first part analyzes the tax consequences of organizing a foreign operation as a branch vs. a foreign subsidiary. The second part analyzes the effect of repatriating substantial amounts of nonUS income. A planning case that traces the effects of host country tax rates and international entity structuring. A US corporation must arrange its operations so as to reduce total current income tax liabilities relative to its offshore operations. The effects of debt and equity investments, of hostcountry tax incentives, and of available marginal tax rates, are examined. Year Case Added to Collection 2005 2006 2006 2011 2010 Prior to 2005 2008 2009 Prior to 2005 2009 Name of Case Multistate - Olsen Group Multistate - Pallor Group Multistate Pike Partnerships Leland Partnerships - Neeley Partnerships Wolford SCorporation Hawaiian S - Corporation - Janis SCorporation Murray SCorporation Tyler 4 Primary Tax Topics(s) Discussed in Case A conglomerate of US corporations must employ methods by which to assign taxable income amounts for its affiliates to specific US states. Different reporting methods are available for this purpose, including applications of consolidation rules and the unitary theory, and the student examines several of them. A more advanced view of combined reporting methods. Students analyze group members' taxable incomes and apply various worldwide and waters'edge computations to derive group state tax liabilities. This case focuses on a corporation with sales in multiple states. Students use apportionment and allocation principles to derive the corporation's taxable income in one jurisdiction in which the corporation operates. This case explores the tax consequences of a contribution of appreciated property to a partnership in exchange for a limited partnership interest. It requires students to apply the allocation rules of IRC 704(b), as well as the loss limitation provisions of 704(d), 465 and 469. The second issue in the case involves the complete liquidation of the partnership subsequent to a cash sale of all partnership properties. A partner retires from a general partnership and takes a series of payments over time as consideration for the interest that is surrendered. The student measures and characterizes the payments, chiefly under 736. This case study involves the installment sale of an interest in a partnership that owns inventory. The sale triggers a termination of the partnership under IRC 708. The case study also requires the students to analyze the transaction from the purchaser's point of view, and to determine the impact of a 754 election on the purchaser's basis in the proportionate share of partnership assets. This case study concerns qualification requirements for an S corporation, curing an election when there exist nonqualifying stock and ineligible shareholders, and the deductibility of fringe benefits for 2 percent shareholders. A C corporation converts to S status and incurs a builtingains tax. An acquisition of the target, an existing S corporation, does not by itself qualify for 368 reorganization status. The student must analyze whether a restructuring prior to the takeover will trigger the step transaction doctrine, or if instead the tax deferral is allowed. This case involves the inadvertent termination of a corporation's Subchapter S election and the tax consequences of the termination to both the corporation and a major shareholder. Secondary issues include the tax consequences of the repayment of an S corporation's debt held by a shareholder when the basis of the debt has been reduced by the deduction of corporate losses, and the proper classification of interest expense on debt the proceeds of which were used to invest in an S corporation. This case focuses on the tax consequences of a distribution of appreciated property by an S corporation to its shareholders and the impact of the distribution on the corporation's Accumulated Adjustments Account. It also raises the issue of reasonable compensation to shareholder/employees. The second part of the case study explores the tax consequences of a sale of S corporation stock during the corporation's taxable year. Year Case Added to Collection 2009 2011 2006 Prior to 2005 2010 Prior to 2005 Prior to 2005 2010 Prior to 2005 Prior to 2005 Name of Case Small Business Bearden Small Business Central Colorado Small Business Curtis Small Business Flatirons Small Business - Hopwood Trust Small Business - Mimi's Cupcakes Small Business Peachtree Tax Accounting Raven Tax Profession and Ethics - Happy Ways Primary Tax Topics(s) Discussed in Case This case involves the application of IRC 351 and includes the transfer of zero basis accounts receivable to a newly created corporation, the transfer of liabilities in excess of basis, a possible "prearranged" loss of control by the transferor, and capitalized organization expense. A second issue is the transfer of a passive activity to a closely held corporation. A third issue is the application of 2701 to value a gift using a corporate "freeze" as part of a business succession plan. This case study involves a variety of problems often encountered by closely held corporations: the application of IRC 1239 to a sale by a shareholder to the corporation; constructive dividends; accrual of corporate expenses owed to a cashbasis shareholder; use by shareholders of company provided cars; and loans to shareholders at belowmarket rates of interest. Another issue concerns the creation of a brothersister controlled group. This case involves a proposed stock redemption from a closely held corporation, and requires the student to compare the consequences of a redemption treated as a sale with the consequences of a redemption treated as an IRC 301 distribution. It emphasizes tax planning with the 318 stock attribution rules. A second issue is the computation of earnings and profits and the effects of a stock redemption on earnings and profits This case study covers three sets of issues. The first part deals with taxable transfers of property and services to an existing corporation by new shareholders. The second part explores the deductibility of home office expenses and travel expenses while temporarily away from home and employer reporting requirements for reimbursed business expenses. The last part considers the deductibility of environmental cleanup expenditures. A trust is a partner in a general partnership. The partnership passes through income to the fiduciary, but it does not make any cash distributions during the year. The student analyzes how these events affect the trust's accounting income and taxable income. The case also addresses the deductibility of fiduciary fees and the two percent floor. A sole proprietorship is planning to incorporate and bring in two new shareholders. In this entrylevel case, the student offers planning ideas about which assets should be transferred to the new entity, and which the proprietor might withhold when the corporation is created. This entrylevel case study involves the choice of an LLC for a new entity. The treatment of flowthrough losses and the consequences of asset distributions to LLC members also are explored in the case. A manufacturer is subject to the UNICAP rules in determining its inventory valuation. The student applies the simplified production method to determine the year's absorption ratio, and to allocate indirect costs to inventory. The client needs to construct a schedule of estimated federal income tax payments for the year, so as to minimize the amounts remitted to the government, and to avoid any penalty for underpayment of estimates. Three exceptions to the penalty are examined. Year Case Added to Collection Prior to 2005 Prior to 2005 Prior to 2005 Prior to 2005 2010 2012 Prior to 2005 2012 2009 Name of Case Tax Profession and Ethics Wise Holland Primary Tax Topics(s) Discussed in Case This case study deals with the various standards of conduct and penalties that apply to tax return preparers and taxpayers, including the standards established in the AICPA's Code of Professional Conduct and IRS Circular 230. The case addresses the applicability of the penalty for substantial understatement of tax liability resulting from the disallowance of deductions and errors on previous years' returns. The case also discusses the disclosure and other penalty abatement provisions available to taxpayers. Finally, the case analyzes the statute of limitations and taxpayer and preparer reporting standards, e.g., substantial authority, morelikelythannot, and "realistic possibility of being sustained.\" Year Case Added to Collection Prior to 2005 FEEDBACK Please contribute to the series editor any pedagogical techniques you have found to be successful or unsuccessful. Any additional comments, ideas for new cases, or other contributions are welcomed. Contact Bill Raabe with these contributions. 2012, PwC LLP 6 pwc PwC Case Studies in Taxation 2013 Edition William A Raabe, PhD, CPA University of Wisconsin-Whitewater We are pleased to provide the PwC Case Studies in Taxation for 2013. The series was introduced in 1989 and now includes 45 cases. The case studies in this series were developed under the guidance of editor William A Raabe, PhD, CPA, Distinguished Professor of Accounting in the University of Wisconsin-Whitewater College of Business and Economics. Previous editors in the series include Betty R Jackson, PhD, University of Colorado at Boulder, and Sally Morrow Jones, PhD, University of Virginia. In preparing the case studies, we endeavored to provide tax educators and students with "true-tolife" situations based on actual experiences of PwC tax practitioners. The accompanying \"Index\" document charts the current list of cases, by topic and by date added to the collection. All cases have been reviewed and modified, as appropriate, due to revisions in the Internal Revenue Code, Regulations, and Revenue Rulings through June 2013. Please contribute to the series editor any pedagogical techniques you have found to be successful or unsuccessful. Any additional comments, ideas for new cases, or other contributions are welcomed. Contact Bill Raabe with these contributions. August 2013 1 pwc PwC Case Studies in Taxation 2013 Edition William A Raabe, PhD, CPA University of Wisconsin-Whitewater Notes to Instructor The PwC Case Studies in Taxation provide students with realistic fact situations in which a number of tax problems and opportunities can be identified. The cases include prospective as well as completed business transactions, so that students can incorporate a certain amount of tax planning into their solutions. The case studies cover various topical areas, summarized in the index, typically encountered in a second university tax course, or in a business-school graduate tax program. Law-school and LLM-Taxation students also find the cases to be a useful integrative exercise, although they often take a different approach to the issues and deliverables than do their business-school counterparts. Student skills required To develop solutions to the case studies, students must be able to locate, understand, and apply the correct source of authority. Sources of authority used in these cases include the Internal Revenue Code, Treasury Regulations, revenue rulings, judicial decisions, and various tax services and treatises. A number of the issues have no "right" answer, either because there is no specific authority on point, or because there is conflicting authority. Facility with excel functions also is needed for most of the cases. The instructor should encourage that the students apply excel \"best practices\" in constructing their spreadsheets, to improve their professional skills, but also to allow you to have more fruitful debriefing sessions for the cases, ie in applying sensitivity analysis. Features for the instructor Many of the cases and solutions employ excel spreadsheets embedded in word documents. This feature allows the instructor to cut-and-paste both text and numerical materials so as to tailor the case and its requirements as needed. The case studies do not specify any specific format in which the solution is to be presented. Often, though, a template for presenting the solution is suggested; this may be distributed to the student. 2 pwc Using the cases in your course Deliverables by the student can take many forms. Possible written formats are a letter to the client identified in the case study, a memo to the client file, or preparing a ruling request for the IRS. Some case study users require oral presentations. These may take the form of a straight presentation or role-play in the setting of a client meeting, resolution of an audit, or representation of a client in a court. The role-play with the IRS or a court can involve outside practitioners playing the role of appeals officer or judge. These presentations may be videotaped to provide feedback to the student or to be used in other classes where you want to demonstrate the process to students who are familiar with the case, but may not have done the research. The suggested case solutions provided to the case studies include citations to relevant authority, and they address both the major and minor tax issues suggested by the facts. The instructor should use discretion as to the depth and breadth of coverage of the issues required by the students in their solutions. The suggested solutions should be kept in strict confidence by the instructor. To aid in keeping the solutions secure, many of the cases are modified in the annual update process to change the data set and thereby the solutions. Most of the case studies involve several distinct issues, designated by Roman numerals in both the case and the suggested solution. Often, one or more of these separate issues can be deleted from a case without damaging the integrity of the remaining material. Thus, an instructor can adjust the length or difficulty of any particular case by selecting the specific issues to be included. If needed, background outlines of pertinent tax law are presented for some of the cases. The time required of the student to complete the case requirements will vary greatly, depending upon the level of tax knowledge of the individual student, their software skills, and the number and type of issues in each case. As a very general guideline, each case study, with all issues included, should require not less than 10 hours of issue formation, research, and analysis by a graduate tax student, before the final deliverable(s) are developed. Alternative Uses Many professors have provided us with feedback on the ways in which they have successfully used these cases. Although most responses suggest that the cases in general are used as they were designed, others have written to pass on information regarding alternative uses. Even in graduate tax classes, the professor may assign some cases as issue identification cases to conserve time and cover more territory. Students can work on the cases in groups, to identify and develop issues, conduct the necessary tax research, or present the required deliverables. 3 pwc The collection is designed for students with developed technical and research skills, but some of the cases have been designed so that issues can be carved out and assigned to undergraduate students. Flatirons involves various tax issues. The first part deals with taxable transfers of property and services to an existing corporation by new shareholders. The fact pattern can be used to point out requirements of 351 and 357 and to focus on the meaning of each requirement. The second part of the case explores the deductibility of home office expenses and travel expenses while temporarily away from home. It also examines employer-reporting requirements for reimbursed business expenses. This part requires reading relevant authorities as well as the statute. Part 1 of the case Hawaiian Memories concerns qualification requirements for an S corporation, curing non-qualifying shareholders, and the deductibility of fringe benefits for 2% shareholders. Undergraduate students probably can find in their textbooks a discussion of the types of shareholders who qualify and the fringe benefit limitations. However, most beginning tax students would not yet have the knowledge to deal effectively with the issue of curing the problem of having non-qualifying S shareholders. The requirements of the Chosen Inc. case include a computation of regular tax and AMT liabilities for a C corporation. Adequate information is found in undergraduate tax textbooks to work with this case. The Peachtree case applies the principles of entity choice for a small business. Most undergraduate tax textbooks will allow the student to analyze whether the entity should incorporate, or be structured as a partnership of a limited liability company. The Wise Holland case addresses the applicability of various constraints of the behavior of the taxpayer and the tax professional, in the context of tax penalties and ethical standards. This is appropriate for many who have access to undergraduate courses and textbooks. Estate, gift, and retirement planning issues for high-income and -wealth individuals are examined in Benoit, Moore, and Pyle. These cases used in concert can make up an interest free-standing module for those students who do not plan to work in the corporate tax sector. The instructor can put together a package of cases that is appropriate to the students' knowledge in the important area of Accounting for Income Taxes. The course could use only one of the cases, or it could build a knowledge base by using more than one of them in sequence. 4 pwc The entry-level Extra case has the student convert a trial balance to the income tax provision. Book-tax differences are classified as permanent or temporary, current or non-current. The journal entry is constructed to record the tax deferrals. The Wood case involves the preparation of a consolidated corporate Schedule M-3, showing book-tax differences of various sorts. The Wylie case requires that the student prepare a Schedule UTP to reflect certain tax position disclosures. The Yost case applies the Schedule M-3 requirements for a US partnership. The Edgewood case uses more detailed data to require the application of ASC 740 / FAS 109 rules to identify book-tax differences from a trial balance, then to compute the tax provision and related journal entries and rate reconciliation. The Estabrook case uses data similar to Edgewood but introduces ASC 740-10 / FIN 48 aspects to the fact pattern, and it asks for completion of a Schedule M-3 for the taxpayer. Distribution Access to an index to the cases and supporting material is available at all times at the editor's web site. An instructor obtains copies of the related files through a request to the editor. Professors hereby are granted PwC's permission to distribute hard copy or electronic versions of the cases to students or other interested parties. Solution files are property of PwC and must be held in the strictest confidence by professors. PwC does not grant permission for any duplication or distribution of solution or supporting files in any format, without the editor's explicit written permission. 2013, PwC LLP 5