Assignment: Taxation
Topic: Entity Classification Judicial Doctrines
For the following problems, discuss whether (i) there is an entity and (ii) the type of entity for US federal income tax purposes.
For some of these problems, there is no "right" or "wrong" answer. I am looking for a few sentences on your thought process why you came up with the response you did.
Problem 1:
A and B each have a professional accounting practice. They each have separate clients and generate separate revenues. To save on overhead costs, A and B agree to share an office and share the expenses of maintaining the office equally. They do not agree to share their respective revenues.
Problem 2:
C and D co-own, as tenants in common, farm property. C provides the funds for the operation, and D manages the farm property. They equally share in the profits from the farm property.
Problem 3:
Part a: E and F set up a "trust" to hold money market mutual funds. They appoint G to act as trustee. G has the power under the trust agreement to buy and sell different money market funds and other investments. G frequently buys and sell different money market shares where he sees opportunities to make a profit. G receives a fee for his services as the trustee. E and F each own as beneficiaries an undivided one-half interest in the underlying money market mutual fund shares and they each have an equal right to all dividends and gains on the underlying money market mutual funds.
Part b: If your answer to Part a is that the arrangement does form a "business entity" for US tax purposes, who are the "owners" of the entity?
Problem 4:
Part a: H files paperwork with New York State to form a single member owned Limited Liability Company. The LLC is used for H's violin business, through which H buys and sells violins, as well as conducts private lessons.
Part b: H's business s booming, but H needs funds to grow the business. H asks I, a wealthy relative, to invest in the LLC for 40% of the LLC's ownership. I agrees and gives the LLC money which H uses to grow the business. I knows nothing about violins, and is happy to let H manage the business.
Format your assignment according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.