Fringe Benefit Tax Assessment Act 1986

3. Compute the unlevered free cash flow and the interest tax shields from 2008 to 2012 based on estimates provided in Exhibit 1 and Exhibit 6. (3 points)

In order to deduct her moving expenses, she must meet certain conditions outlined in Reg. 1.217-2 (c). Helen meets the first two requirements (relevance to work test and distance test) without any issue. The third requirement has not yet been met yet though. This requirement is a minimum period of employment. Since she is a full-time employee, she must work full-time in this general location for at least 39 weeks during the 12 month period after the move. This does not mean she is not required to remain employed at her current place of work to meet this test. Even though she does not meet this requirement yet, she can deduct these expenses on the current years return or the year the reimbursement is paid to her by her employer. If she recognizes the expenses on this year’s return and does not end up meeting the requirement, she will have to include the deductions she took on this year’s return in next year’s gross income.

While you work with them you will get a pay check every two weeks. Therefore $400 was given to the full-time people before taxes were taking out and $200 for the part-time people before taxes were taking out. They also had another thing that was when you graduate from the program you will also get an award. That could be used for to pay something back on your student loans or it can go to your school for your tuition. It was $4,725 for the full-time and $2,362 for the part-time.

must pay a fee to the employment agency of 22% of his first four weeks’ pay. How

HMRC, EIM01140 : Employment income: Flexible Benefit Plans.[internet]. Available at: http://www.hmrc.gov.uk/manuals/eimanual/EIM01140.htm [last accessed 23rd November 2010]

HMRC. Interest would be due on late payment of tax but penalties would be extremely unlikely due to full disclosure to

1(a) As a result of a recent court settlement for a client John earned $300,000 for his law practice LLC. He wants to minimize his tax liability and understand how the IRS will treat this money earned. He lease’s office space for $3,500 per month. He wants to know the advantages in leasing office space versus purchasing the building.

becomes higher than $200,000, any profit beyond this amount would be taxed at 40%. So, if the alternative #5 makes the PBT higher than $200,000, we have to consider another tax saving = $200,000 (40%-28%).

P = F(1 + i)-N where i is 15% as mentioned in the case suggestions and N is 8 as we found above, and F is $1.2375B

In order to determining how the $300,000 fee was received as Federal income on the part Mrs. John Smith, we first have to determine the requirements for income. According to Code Sec. 61(a)(1) of the Internal Revenue Code (IRC) “gross income includes all income from whatever source derived,” that is including the following items: compensation for services, including fees, commission, fringe benefits and similar items (Intuit-TaxAlmanac, 2006). In John’s case, income received from fees that were paid by his client from rendered services will meet that requirement of gross income. Under Section

According to the company’s annual report in 2009, the Federal statutory tax rate is 35%. Along with the above analysis, we have gathered all the key information necessary to estimate the WACC as following:

addition, the company has an applicable tax rate of 40% and no unused tax loss or credit carryforwards.

The next step was to calculate the free cash flows for the eleven-year period. In order to do so, we used to following formula: FCF = EBIT(1-tax) + depreciation - change in NWC – CapEx. From here, we used to WACC of 13.89% previously calculated, in order to find the present value of each FCF.

These amounts of tax savings should be added to the incremental cost savings for each year to come up with the total cash inflows. The present value of all these cash inflows and outflows can be calculated by discounting them at 12.19%. This rate is calculated by assuming that the purchasing power parity holds in this scenario. The company can do the feasibility analysis by looking at both from the subsidiary’s and parent’s perspective by assuming that the purchasing power parity holds. Hence, this rate can be regarded as opportunity cost of investment because it is the second best alternative for the company for investment purposes.

Challenges for the employer and the situation include the issues related to government taxes such as Medicare and Social Security. In addition, the employer is bound to pay reasonable benefits to all of its employees equally. If the utility does not do this, and it is determined that Karen is an employee of the utility, and Karen is a legitimate case against the utility to recover the lost benefits. To rectify this situation, the utility should clarify exactly what Karen’s individual situation is, and hopefully with the help of a tax advisor. The advisor may suggest that Karen's work responsibilities be clearly delineated and that she be afforded the requisite benefits. Lastly, all necessary taxes, including payroll amounts for charges such as Medicare and Social Security need to be paid in full.