Define three tax issue according to the following scenarios:
After signing the contract, MAX Marketing Agency shall do an estimation of the cost of the advertisement and marketing for the aforementioned period and then submit the estimates to HP. HP is then expected to approve the estimates in writing so as to allow MAX to go ahead with implementing the contract.
Under Sec. 1250 (d) (1), MAX will benefit from the contract by earning an agreed percentage as a commission from the revenues earned. All marketing expenses will be catered for by HP. HP shall endeavor to keep MAX with enough funds to cater for expected charges for marketing and advertisements.
MAX should ensure that it records all its tax returns to avoid unnecessary additional charges and fines (Rev. Proc. 2002-32, 2001-1 C.B.959). Likewise, HP should as well remit its taxes and tax returns for the period it will be in contract with MAX as failure to do so could lead to both HP and MAX implicated in a court of law for tax avoidance and evasion (Rev. Proc. 2002-32, 2001-1 C.B.959).