Tax Factors for Business Decisions question

Guidelines and Grading Guide Overview For this assignment, you will complete a tax return for a sole proprietor based on the provided scenario. Further, you will prepare a memorandum for Larry the Landscaper providing professional recommendations in the informational areas indicated. The complete return and your professional tax planning advice are due in Module Four. All necessary PDF fill-in forms are available from the Internal Revenue Service. Main Elements Information on Larry the Landscaper: Larry the Landscaper Larry's Luxury Landscaping Service 13579 Grassy Knoll Return Items: Larry earned $325,000 through his landscaping service. Business Expenses on Larry's Return: 1. $48,000 in wages paid to others 2. $3,200 paid in employment taxes 3. $2,400 paid in advertising expenses 4. $12,000 paid in equipment repair and maintenance 5. $6,500 paid in fuel expenses 6. Larry's dedicated business line to home office costs $995 per year a. 15% of Larry's home is dedicated office space b. Larry paid $24,000 in home interest expense c. Larry paid $4,800 in utilities for his home d. Larry paid $3,600 in property taxes e. Larry pays $1,950 for home insurance per year Need to Know: 1. Larry's lawn care equipment is in great working condition, but depreciation is not an issue as all items have been fully depreciated at this point. 2. Larry pays $15,000 a year in health insurance premiums for full family coverage. 3. Larry currently has no retirement plan aside from Social Security. 4. Larry will be purchasing new office equipment this year as his old computer, printer, and fax are outdated. Larry does not know he can depreciate home office items. 5. Larry's wife and oldest son often work for the landscaping service, but do not take a wage; they are just \"helping dad out.\" 6. Larry is considering disposing of his current equipment and upgrading with newer, more efficient equipment. Larry is unsure, however, of any tax-related consequences or benefits resulting from this decision. Guidelines DO NOT make additional assumptions relative to filling out the tax return. Remember, this return is not meant to be extensive, but to provide the foundational information necessary as the advisor to make recommendations to Larry on tax minimization and planning strategies. Think back on what you learned through the Module Three discussion, and review the article in Module Three Resources titled Dollars and Sense: Effective Tax Planning Is a Saving Grace. How can Larry avoid recognition of some income for the current and defer this recognition until a later time in life, hopefully when income is less and Larry is in a lower tax bracket? How can Larry defer tax liability now and better plan for providing for himself in retirement years? What tax deductions/benefits is Larry not currently taking advantage of? Rubric Requirements of submission: All IRS tax forms and memoranda must be submitted. Instructor feedback: Students can find their feedback in the grade book as an attachment. Critical Elements Exemplary Main Elements Includes all of the main elements and requirements and cites multiple examples to illustrate each element (23-25) Provides in-depth analysis that demonstrates complete understanding of multiple concepts (18-20) Includes most of the main elements and requirements and cites many examples to illustrate each element (20-22) All of the course concepts are correctly applied (18-20) Most of the course concepts are correctly applied (16-17) Draws insightful conclusions that are thoroughly defended with evidence and examples (18-20) Draws informed conclusions that are justified with evidence No errors related to organization, grammar and style, and citations (14-15) Minor errors related to organization, grammar and style, and citations (12-13) Inquiry and Analysis Integration and Application Critical Thinking Writing (Mechanics/Citations) Earned Total Comments: Proficient Provides in-depth analysis that demonstrates complete understanding of some concepts (16-17) Needs Improvement Includes some of the main elements and requirements Not Evident Does not include any of the main elements and requirements Value 25 (0-17) (18-19) Provides in-depth analysis that demonstrates complete understanding of minimal concepts (14-15) Some of the course concepts are correctly applied (14-15) Draws logical conclusions, but does not defend with evidence Does not provide in-depth analysis 20 (0-13) Does not correctly apply any of the course concepts (0-13) 20 Does not draw logical conclusions 20 (0-13) (16-17) (14-15) Some errors related to organization, grammar and style, and citations (11) Major errors related to organization, grammar and style, and citations (0-10) 15 100%