1. Lee is starting a small lawn service. On advice of his accountant, Lee has formed a corporation and made an S corporation election. The accountant has asked Lee to think electing a fiscal year ending on the last day in February. The accountant pointed out that Lee's business is likely to slow down through the winter. Also, the accountant shown that the February year end would permit the accountant to do Lee's accounting work after the busy season in accounting is over. Evaluate what tax issues should Lee consider?
2. Judy's Cars, Inc. sells collectible automobiles to consumers. Judy employs specific identification inventory valuation method. Prices are negotiated by individual customers and Judy. Judy accepts trade-ins when she sells an automobile. Judy negotiates allowance for trade with the customer. Rarely, Judy finds that it can take two or three years to sell a given automobile. Judy now has four automobiles that she has held for over 2 years. She expects to eventually sell those automobiles but expects that they will sell for less than the real cost. Evaluate what tax issues should Judy consider?