Question
Sarah Jane Smith has a successful career as the CFO of a small biotech company in San Diego, California earning approximately $350,000 each year. Her
Sarah Jane Smith has a successful career as the CFO of a small biotech company in San Diego, California earning approximately $350,000 each year. Her two children have graduated from college, and she and her husband are now empty nesters. Her son took a job at a marketing firm in Seattle, WA, and her daughter is a doctor in Philadelphia, PA. She and her husband enjoy beer and have brewed beer at home as a hobby for several years. With more time to devote to other activities, they decided to open up a craft brewery, and they invested $500,000 to get it started. However, they believe that it will be 5 to 6 years before the brewery is profitable. Ms. Smith would like your advice as to any potential tax problems with the brewery investment.
- Are all of the given facts pertinent? Which (if any) are irrelevant?
- What is the primary tax issue in this case? (Your response should be a research question.)
- What other information might you want to help research the primary tax issue? (Consider questions you would ask the taxpayer.)
- What other research questions / tax issues might be relevant to this situation?
- What keywords might you use in an online tax research query to find relevant authorities for one or more of these questions?
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