Research Assignment #2: Cash vs. Accrual Method Facts: R.E.M., a band and calendar year corporation, recently sold $20,000,000 of tickets for concerts scheduled in 2022 and 2023 . For financial statement purposes, R.E.M. will recognize the income from the ticket sales once the concerts have been performed, and they are required to return the payments if the concert is cancelled. For tax purposes, R.E.M. would like to use the accrual method and defer the recognition of sales until the concert has been performed. This is the first time the band has sold tickets this far in advance. Requirements: By applying the 5 steps in tax research, prepare a memo (in the sample format provided) to your professor discussing the tax impact of the issue identified in the facts above. Your memo should: 1. Accurately state the facts presented. 2. Correctly identify the issue. 3. Provide, at a minimum, 3 authorities. 4. State the correct conclusion a. For tax purposes, can R.E.M. defer recognition of the ticket sales until the concerts have been performed? 5. Your analysis should contain the following: a. In your own words, provide an analysis of each of the below primary and secondary authorities to determine how you came to the conclusion in 4(a) above. b. Primary authorities: IRC Sections 451 (c) and 446. c. Secondary authorities: i. Tampa Bay Devil Rays, Ltd 84 TCM 394 ii. Artnell Co. v Commissioner iii. Schlude v Commissioner iv. American Automobile Association v U.S. v. Auto Club of Michigan v Commissioner d. Make sure your analysis clearly supports your conclusion and it is written at an undergraduate level. USE SPELL CHECK. Research Assignment #2: Cash vs. Accrual Method Facts: R.E.M., a band and calendar year corporation, recently sold $20,000,000 of tickets for concerts scheduled in 2022 and 2023 . For financial statement purposes, R.E.M. will recognize the income from the ticket sales once the concerts have been performed, and they are required to return the payments if the concert is cancelled. For tax purposes, R.E.M. would like to use the accrual method and defer the recognition of sales until the concert has been performed. This is the first time the band has sold tickets this far in advance. Requirements: By applying the 5 steps in tax research, prepare a memo (in the sample format provided) to your professor discussing the tax impact of the issue identified in the facts above. Your memo should: 1. Accurately state the facts presented. 2. Correctly identify the issue. 3. Provide, at a minimum, 3 authorities. 4. State the correct conclusion a. For tax purposes, can R.E.M. defer recognition of the ticket sales until the concerts have been performed? 5. Your analysis should contain the following: a. In your own words, provide an analysis of each of the below primary and secondary authorities to determine how you came to the conclusion in 4(a) above. b. Primary authorities: IRC Sections 451 (c) and 446. c. Secondary authorities: i. Tampa Bay Devil Rays, Ltd 84 TCM 394 ii. Artnell Co. v Commissioner iii. Schlude v Commissioner iv. American Automobile Association v U.S. v. Auto Club of Michigan v Commissioner d. Make sure your analysis clearly supports your conclusion and it is written at an undergraduate level. USE SPELL CHECK
