...taxable on the shareholders. If a company does not distribute the dividend then the govt. looses on the tax which would have been paid on such dividend. To avoid this al companies are required to distribute adequately their profit their profit within 12 months of the end of accounting year. This shows that there is double taxation of profit in Kenya, first at the corporate flat rate and then on the hands of the taxpayer. The ITA empowers the commissioner to determine the amount of distribution that could be made without prejudice to the requirements of the company’s financial needs. A shortfall is the difference between the amount of dividend determined by the commissioner and the actual distribution by the company. The commissioner expects the company to distribute the following amounts as dividend to the shareholders: A.40% of the net adjusted trading profit after tax B.100% of non trading income such as interest, dividend etc. Companies excluded from shortfall regulation: Companies that are subsidiaries of others. Companies that are subsidiaries of foreign companies and have no resident shareholders Companies with 51% or more shares held by non residents Shortfall is deemed to have been distributed and hence been a part of the income of the shareholders and are liable to pay tax. However, it’s the company which is required to pay tax on the shortfall dividend. Circumstances under which companies will be entitled to more than 60% permissible...
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...Chapter C:1 Tax Research Learning Objectives After studying this chapter, the student should be able to: 1. Distinguish between closed fact and open fact tax situations. 2. Describe the steps in the tax research process. 3. Explain how the facts influence tax consequences. 4. Identify the sources of tax law and assess the authoritative value of each. 5. Consult tax services to research an issue. 6. Apply the basics of Internet-based tax research. 7. Use the citator to assess authorities. 8. Describe professional guidelines that CPAs in tax practice should follow. 9. Prepare work papers and communicate to clients. Areas of Greater Significance Since this will usually be a student’s first exposure to tax research, the importance of the facts to the tax results, federal tax services and the citator should be discussed. The widespread use of Internet-based databases for tax research makes this means of tax research much more important. An effort should be made to introduce Internet-based searches to the students if at all possible. The text discusses two types of professional guidelines for CPAs in tax practice. Areas of Lesser Significance In the interest of time, the following areas may be omitted: Sample work papers and client letter (Appendix A). Problem Areas for Students The following areas may prove especially difficult to students: ...
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... Business Forms Worksheet There are seven forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company (including the single member LLC), S Corporation, Franchise, and Corporation. 1. Research and provide three advantages and three disadvantages for each business form. 2. Provide a 100- to 200-word summary in which you provide an example business that you would start for each form. What is legally necessary to file in order to form that business? Discuss at least one of the advantages and one of the disadvantages of that form. Sole Proprietorship Advantages 1. Ths sole proprietor (owner) has complete control and decision making power of the business. 2. Sale or transfer can be completed at the discretion of the sole proprietor. 3. No corporate tax payments. Disadvantages 1. The sole proprietor can be held personally liable for debts and obligations of the business. 2. All responsibilities and business decisions fall on the shoulders of the sole proprieter. 3. Investors don’t usually invest in sole proprietorships. Summary I would start an online costume selling business as a sole proprietorship. I would choose this type |of business as a sole proprietorship because it is an inexpensive business. I would not have to open up | |an actual building to sell the costume jewelry. I would have a distributer from whom I receive my ...
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...Tax Research Memorandum To: Lauren Smith From: Date: May 18, 2012 Re: Tax Treatment of MBA education expenses Facts You incurred $15,000 in educational expenses in the course of earning a MBA. You want to deduct these expenses as an employee business expense in your tax return since your employer does not have an education expense reimbursement program. Issue The issue is (1) whether the education was required to keep your present salary, status or job and/or the education maintains or improves skills needed in your present work, and (2) whether the education was needed to meet the minimum educational requirements of your present trade or business, and (3) whether the education is part of a program of study that will qualify you for a new trade or business. Rule It has been established that education expenses can be deducted as business expenses when the education maintains or improves skills needed in your current work but the education was not needed to meet minimum requirements and did not qualify you for a new trade or business. Publication 970 (2011) Tax Benefits for education Federal Tax Regulations, Regulation, §1.162-5., Internal Revenue Service, Expenses for education Singleton-Clarke v. Commissioner, T.C. Summary Opinion 2009-182, Allemeier v. Commissioner, T.C. Memo. 2005-207 Blair v. Commissioner, T.C. Memo. 1980-488 Sherman v. Commissioner, T.C. Memo. 1977-301 Link v. Commissioner, 90 T.C. 460, 463-464 (1988) Schneider v. Commissioner...
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...Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Copies of Doing Business 2012: Doing Business in a More Transparent World, Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004: Understanding Regulations...
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...University of Phoenix Material Business Forms Worksheet There are seven forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company (including the single member LLC), S Corporation, Franchise, and Corporation. 1. Research and provide three advantages and three disadvantages for each business form. 2. Provide a 100- to 200-word summary in which you provide an example business that you would start for each form. What is legally necessary to file in order to form that business? Discuss at least one of the advantages and one of the disadvantages of that form. Sole Proprietorship Advantages 1. Owner makes all decisions 2. Owner hires employees 3. Less complicated to start-up Disadvantages 1. If owner dies, the company does as well 2. Owner responsible for everything 3. Self-employment tax Summary Owner has a lot of power when opening a Sole Proprietorship. Human Resources is not needed since the |Can hire employees and make decisions for the business. It is easier to start up. Tax benefit is claiming | |Self employment; not including deductibles or premiums in Health insurance. The business closes once | |The owner is deceased. | | ...
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...Wilman Martinez Income Tax 1 Dr. Nazik Roufaiel Module 1 Assignment Part 1 March 21, 2014 35. Serena operates a lawn maintenance service in Southern California. As most of her employees are itinerant, they are paid on a day-to-day basis. Because of cash-flow problems, Serena requires her customers to pay cash for the service she provides. a. What are some of the tax problems Serena might have? Serena might have problem keeping track of sales taxes and/or paying FICA and FUTA taxes. b. Asses Serena’s chances of audit by the IRS? Serena will have a great chance of getting audit by IRS because she Receives payment in cash and those transactions are easier to hide. (Hoffman & Smith 2014, p. 1-21) 42. On a federal income tax return filed five years ago, Andy inadvertently omitted a large amount of gross income. a. Andy seeks your advice as to whether the IRS is barred from assessing Additional income tax in the event he is audited. What is your advice? It will depend on how much money was omitted. The IRS is barred as long as the amount omitted was less than 25% of gross income and the tax return is not view as fraudulent. The IRS can only go back three years to access additional tax liability. On the other hand, if it is more than 25% the statue of limitation is increased to 6 years, then the IRS is not barred. (Hoffman & Smith 2014, p. 1-23) I would recommend Andy to fix the mistake....
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...Tax Return Position Minh Saldana ACC/455 Professor Monica Walker August 20, 2012 * The objectives used for legal study are ordinarily included two substantial parts - primary sources and secondary sources. The primary sources are declarations of the enactment from the government such as, an executive agency, legislature, court, governor, or president. The secondary sources suggest a deconstruction, a rephrasing of the primary law. The secondary sources are used to boost determine and demonstrate the primary sources of law. The secondary sources might impact a legit judgment but these sources absolutely do not have the commanding jurisdiction like the primary sources of law. Primary sources of tax law The following are the primary sources of Federal tax law: * United State Code (USC) Title 26; * Court of Federal Claims , Decisions of the USC, federal circuit courts, district courts, and the United States Supreme Court; * Title 26 of USC - Treasury Regulations; * Revenue Rulings , Revenue Procedures, Announcements, and Notices - IRS guidance published in the Internal Revenue Bulletin, and * Other IRS material, including Private Letter Rulings and Technical Advice Memoranda. * ("Tarlon Law Library", 2011). * The secondary sources of tax law There are some of secondary sources such as: * Dictionaries that are designed to give information about terms used in law called "Legal Dictionaries" * Some words & phrases that give the expression...
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...transparency of tax return Addressed to: Grant O'Brien (Chief Executive Officer of Woolworths) 19/04/2015 Word count: 1379 Topic: Why does the Australian legislator require additional ATO disclosures beyond AASB 112? Table of content 1. Executive summary 2. Introduction 3. Summaries of the contents of Paragraph 79, 80, 81(c), and 84-86 of AASB 112 4. The shortage in Woolworths’ present financial report 4.1 Accrual basis V.S. Cash basis 4.2 Tax information not separately disclosed correspond to each jurisdiction 4.3 How the ATO amends the vulnerability of AASB 112 5. Recommendations to Woolworths refer Rio Tinto’s tax report 5.1 How to achieve an easier assessable tax report for the public 5.2 How Woolworths can obviate aggressive tax avoidance 6. References 1. Executive Summary AASB 112 has been implemented to give guidance to companies about how to disclose related tax information, also providing surveillance to the phenomenon of tax evasion. In a vastly developing economy, various large and multinational companies have found ways of escaping by paying minimal taxes. For example, shifting revenue to a lower tax rate country or manipulating past tax losses avoids huge amounts of tax payment. The ATO published disclosure requirements in 2014 aiming to eliminate this phenomenon. The main discrepancy between financial statement and company’s income tax is tax under financial statements were calculated based on accrual basis whereas tax under income...
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...Tax Research Memo #1 Martin Coldiron ACCT390-VIFF-F14 Annette Hoeltzer August 28, 2014 Tax Research Memo #1 Memo DATE: August 28, 2014 TO: Mr. Brent Ouray FROM: Martin Coldiron RE: Advising on filing status Facts: Brent and Kathy Ouray have been married since 1996. Starting in 2010 until current they both have been experiencing marital issues. They are presently not legally separated, but consider themselves to be estranged. Do you to be financial difficulties of Brent and Kathy they have not been able to go through with a divorce. They have three sons together that they both want to remain in their sons lives. So based on the financial concerns of both Kathy M Brent they are unable at this time to financially support to separate homes for them and the children, so they currently all still live in a single-family home in Chicago, Illinois. Brent and Kathy are both financially supporting their three sons and maintaining the upkeep of the house that they are all currently reside. While comparing Brent and Kathy’s annual income, Brent substantially earns more annually than Kathy. They both agree that even though they both support the children and maintain the home that Brent contributes more. In the current tax season Brent has stated that he would like to file a separate Federal Income Tax from Kathy and he would like to claim head of household as his status on the current year’s return. Brent feels that, if he and Kathy keep separate households while under the same...
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...Grading Summary | These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 5/16/2012 | Time Spent: | 05 min , 36 secs | Points Received: | 36 / 36 (100%) | | Question Type: | # Of Questions: | # Correct: | Multiple Choice | 6 | 6 | | | Grade Details | 1. | Question : | Money markets are markets for ______. | | | Student Answer: | | foreign stocks | | | | consumer automobile loans | | | | U.S. stocks | | | | short-term debt securities | | | | long-term bonds | | | | Points Received: | 6 of 6 | | Comments: | | | | 2. | Question : | Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership? | | | Student Answer: | | A. Corporations generally face fewer regulations. | | | | B. Corporations generally face lower taxes. | | | | C. Corporations generally find it easier to raise capital. | | | | D. Corporations enjoy unlimited liability. | | | | E. Statements C and D are correct. | | Instructor Explanation: | The advantages of incorporation include unlimited life, easy transferability of ownership interest, limited liability, and ease of raising money in the capital markets. Regulations and double taxation are disadvantages of corporations. | | | | Points...
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...Based on the relevant facts and circumstances Mrs. Jones would not be entitled to full relief from joint and several liability on the issues of the understatement of the gambling gains and gains on the sale of stock and real estate. She would qualify for partial relief under section 6015(f) for the embezzled funds. This omission is attributed solely to her husband; she had no knowledge or reason to know. Furthermore, she received no benefit from the embezzled funds, which were used to support his gambling addiction and offset his losses. However, Mrs. Jones had actual knowledge of the understatements by having signed the purchase agreements for the real estate and stock, the proceeds of which were paid to both Mark and Leslee. She endorsed all checks which were deposited in their joint account and she wrote checks out of this account as well. Although Mark maintained a separate account for his gambling winnings and stock gains, this does not however relieve Leslee from liability. Leslee may not have had actual knowledge of his winnings, but because of her involvement in the activity such as, accompanying Mark to race tracks and to Las Vegas, where it was known he was a big gambler, evidenced by their rooms always being complimentary, as well as any costs associated with their stays, she admitted to watching her husband gamble and when she got bored she would watch shows or go shopping where she would spend thousands of dollars at a time. Under these circumstances, a prudent person...
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...The Impact of Transfer Pricing on Corporate Disclosures Written By: Roger Hsueh Aiming to plug tax collection leaks, impose reasonable tax burdens and bring Taiwan in line with the international trend, toward the end of 2004 the Ministry of Finance issued and put into effect "Income Tax Audit Standards for Transfer Pricing Inconsistent with Arm’s Length Transactions". Following the implementation of the transfer pricing audit standards, not only will the taxation authorities be able to investigate back five years to see if corporate income taxes were consistent with “arm’s length” transactions; henceforth the burden of proof will have shifted from the National Tax Administration to corporations. Corporations will have to furnish evidence on their own behalf to prove their transactions are consistent with arm’s length ones, furnishing the relevant documents. As a result of this, thousands of entities - affiliated companies, parts of corporate groups, foreign businesses in Taiwan, and factories set up in Mainland China - face heavy tax risk on their “related party transactions”. And for public companies, because of their larger scale of operations and the ease of obtaining their regularly issued financial statements, the disclosures in public company financial statements prescribed by the transfer pricing audit standards will have a major impact. As provided in “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, when a public company prepares...
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...United States Tax Cases (1913-1999), [97-2 USTC ¶50,905], U.S. District Court, Dist. Ore., Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant , Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock:, (Oct. 10, 1997), (Oct. 10, 1997) [97-2 USTC ¶50,905] Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant U.S. District Court, Dist. Ore., Civ. 96-1000-JE, 10/10/97 [Code Secs. 1244 and 7402 ] Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock: Evidence.--The government was denied summary judgment on the issue of an individual’s entitlement to a deduction against ordinary income for a loss on the worthlessness of small business stock because genuine issues of material fact existed regarding the stock’s qualification as Code Sec. 1244 stock. The government contended that the taxpayer would not be able to substantiate the three requirements for obtaining tax benefits under Code Sec. 1244 . However, with respect to the “small business” requirement, the record supported an inference that the aggregate funds of the corporation that issued thestock did not exceed $1 million on the issue date. With respect to the requirement that qualifying stock be issued for money or other property, the taxpayer produced enough evidence to raise a question of fact as to whether he gave the corporation money...
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...concepts of judicial court opinions and their regulations. Learning by Doing Virginia State’s Public Record Availability Statute The State of Virginia Public Records Act was established and passed in 1975. This act allows records and documents accessible to the public, but only within the operation of an agency within the Commonwealth of Virginia. Public records are considered information that is documented and recorded and that gives transaction and/or activity of an employee, agency or public officer of the state. In no regards to the physical and characteristic form, if the transaction is in any connection of public business, it is considered as a public record. There are only three specific records that are not considered public, which are reference books, materials of exhibition and publications of stocks. “The General Assembly intends by this chapter to establish a single body of law applicable to all public officers and employees on the subject of public records management and preservation and to ensure that the procedures used to manage and preserve public records will be uniform throughout the Commonwealth (1976, c. 746.).” U.S. Supreme Court holding federal income The U.S. Supreme Court ruled that a direct tax on personal income was unconstitutional as a result of the case of Pollock v. Farmers‘ Loan and Trust Company. The lawsuit was triggered in response to the Income Tax Act of 1894, which stated that any direct tax on the income of real and of personal property...
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