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PROJECT INFORMATION:
You are a manager at a local accounting firm, and Kate and Sam Smith are your clients. It is the end of the year, and they have come to ask your advice on some tax planning strategies, as well as help preparing their tax return.
PROJECT REQUIREMENTS:
This project is split into four (4) parts with one (1) part due each week of the course. Based on your readings, use of technology, research of literature, and other sources do the following:
Part 1: Early next year, Kate and Sam Smith will inherit $200,000. Kate and Sam are trying to decide how to invest this money and have asked you, their tax accountant, to look into some potential investment opportunities. Please see the attached excel spreadsheet, where you will complete the annual after-tax rates of return column for each investment opportunity you have identified. Include a paragraph on the spreadsheet where you list the three basic tax planning strategies, and the features of taxation each of them exploits.
Part 2: It is the end of the tax-year, and Kate and Sam Smith need your help completing pages 1 and 2 of Schedule 1040 and Schedule A. Please see the attached document with the information you will need to complete these forms and submit a draft return. Tax forms can be obtained from the IRS website. **Be sure you save the form to your computer BEFORE you fill in any information or your data will be lost when you save the file with the data entered. Once saved, access the saved form from your computer, not the web browser.**
Part 3: Based on the feedback you received last week, finalize the Smith’s tax returns. Write a 4-page letter to Kate and Sam Smith which:
a. Walks them through their current year tax return.
i. Detail which expenses they incurred that were nondeductible for tax purposes and explain why. The Smiths have always itemized deductions instead of taking the standard deduction on their tax return. Explain how this may no longer be the best tax strategy due to changes in tax law under the TCJA.
ii. Regarding the investment opportunities you calculated in week 1, explain:
1. Which investment opportunity you would recommend.
2. What the conversion tax planning strategy is, and which of these investments employ this strategy.
3. How “implicit taxes” may limit the benefits of the conversion strategy.
iii. Kate and Sam are considering purchasing a vacation home.They plan on spending several months each year vacationing in the home and renting out the property the rest of the year. Provide an overview of the key tax considerations they should take into account when making this decision.
Part 4: Present your findings as if you were presenting them to the clients.PROJECT REQUIREMENTS:
This project is split into four (4) parts with one (1) part due each week of the course. Based on your readings, use of technology, research of literature, and other sources do the following:
WRITING REQUIREMENTS:
– The letter should be 4 pages in length. Include the Excel spreadsheet which calculates the annual after-tax rate of returns.
– The Smith Family have been tax clients for years so the tone of letter should be positive and helpful.
– Include the Excel spreadsheet which calculates the annual after-tax rate of returns.
– All sources used are to be submitted in APA format.
– Please use the writing center if needed.
TECHNOLOGY/COLLABORATIVE ACTIVITY:
– You will be presenting and discussing your findings to the class using the voice-over feature in PowerPoint or YouTube.
– Please be sure the audio is clear and the file or link is accessible in the Week 4 Presentation discussion board.
– You will be using Excel to calculate the annual after-tax rate of return for the potential investment opportunities.
– You will comment to other classmates on their presentations as if you were the Smith’s trying to understand any adjustments made and/or answer any questions presented.
