Then, in a memorandum you write to the client, explain the tax consequences of the possible sale or exchange of the land. Base your explanation on your computations and relevant sections of the Internal Revenue code, including the impact on cash flow and salary or cash distributions. Specifically, the following critical elements must be addressed: A. Compute the property disposition capital gains and taxation of gross income. B. Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, brokers fees, closing costs, appraisals, and surveys and the correct schedule form to complete. C. Describe the after-tax effects on the clients cash flow based on the sale of the land. Reference appropriate capital gains tax rules. D. Explain whether or not the client and his child should take a salary or cash distribution according to tax purposes and Internal Revenue Code and Treasury regulations. Consider the type of business and the tax effect whether it is salary, dividends, or cash withdrawal.

TAX 650 Data Sheet for Final Project Client Profile Bob Jones is a 60-year-old single man who 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. Bobs personal wealthincluding investments in land, stocks, and bondsis about $14,000,000. He reported an interest income of $20,000 and a dividend income of $6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1996 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, who is 23 years old and single