Pectinidae Engineering, Inc. Case Analysis

1) Section 351: Since Individual will be in control (80%+ ownership) of future corporation, he will not incur a taxable event

The clients involved in this case study is an African-American 12-year-old boy ,30-year-old mother and 33-year-old father. I have been assigned to work with the 12-year-old regarding his issues with attention deficit hyperactivity disorder, anger issues, mood disorder, and oppositional defiance disorder. My agency has created several goals for the client to achieve while receiving services such as mastering three coping skills to improve his ability to effectively deal with losses in his life (i.e. the absence of his biological father); identifying seven ways he can respect authority figures in the home and community; and mastering five

The United States government is the largest single purchaser of goods and services in the world. Even during times of economic hardship, the US continues to dump billions into the private sector. The federal procurement spending rate of growth has surpassed the rate of U.S. inflation every year, since 2000. With annual federal procurement budgets of more than $400 billion, it is no surprise that the competition for government contracts has increased tremendously. Consequently, more and more companies are trying to get a piece of the action. When these companies adhere to all of the required regulations and statutes, they expect their proposals to be evaluated and the contract awarded in

John has income derived from a business and as such the gross income will be taxable. (Code §1.61-3(a)) This total amount of taxable income will pass through to his personal taxes since he has an LLC, meaning he will be subject to self

| If all members of a new foreign entity have limited liability, the entity is classified as an association taxed as a corporation.

Federal tax rates on corporate taxable income vary from 15% to 35%. State and local taxes and rules vary by jurisdiction, though many are based on Federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. Corporations are also subject to a Federal Alternative Minimum Tax and alternative state taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Controlled groups of corporations may file a consolidated return. Partnerships have flow-through taxation which means that the entity does not pay taxes on its income. Instead, the owners of the entity pay tax on their "distributive share" of the entity's taxable income, even if no funds are distributed by the partnership to the owners. Estates and nongrantor trusts must file income tax returns just as individuals do, but with some important differences. For one, their income is taxed at either the entity or beneficiary level depending on whether it is allocated to principal or allocated to distributable income, and whether it is distributed to the beneficiaries. And because their exemption amounts, tax brackets and related thresholds haven’t been indexed for inflation or modified for tax relief to the extent those for individuals have, they can be

1. You recently retired from government contracting work and established a consulting company (fully consistent with government ethics laws and rules, of course) with the primary focus of advising potential government contractors and subcontractors. Mr. Johnny Jones, of The Johnny Jones Flooring and Construction Company has approached you with a question. Jones and his company are potential subcontractors (they, obviously, specialize in flooring) on a federal construction contract worth a little over two million dollars ($ 2,000,000.00) recently awarded to the Jimmy Smith Construction Company (Jimmy Smith, the prime contractor). Neither Johnny nor his company have ever been part of a government contract

John Smith’s earned income of $300,000 will reported as gross income either on Schedule c of the individual return or as gross income on the LLC return. As a result of the variance in the state laws as to whether or not a single person LLC can report on a business return is the reasons why it could be either reported on the Schedule C or LLC. Some states that do not allow the separate reporting see the LLC as meaning not to be reported separately from the individual.

It was a pleasure to meet with you last week. This memo is in regard to your concerns that you mentioned during our meeting and my recommendation for each one. Please review this memo and call me if you have any questions. 1) John Smith tax issues: a. How is the $300,000 treated for Purposes of Federal Tax income? Gross income means” all income from whatever source derived, including (but not limited to the following items: Compensation for services, including fees, commissions, fringe benefits, and similar items…..” (http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._61._Gross_income_define d#Location_in_Internal_Revenue_Code) According to IRC Publication 3402 Taxation of Limited Liability Companies “an individual owner of a

“In my opinion, the Case would be improved by including the following summary” An American agriculture of the nineteenth century Cyrus McCormick, invented a company that produced farming equipment called McCormick Harvesting Machine Company. In 1902 his son Cyrus McCormick II merged the company with three competitors renaming it the International Harvester Company. By the late 1980’s the company had moved from producing farming equipment to manufacturing automotive products, trucks, and school buses. In the late 1980’s International Harvester company was renamed Navistar International Corporation. Over the years NIC changed and one of the most dramatic changes was the relationship with its longtime auditor Deloitte. (Knapp, 2015)

Jon Fries, Fletcher Anderson, Craig Schuster, and Catherine Sprauer are the main figures in this case and they had important responsibilities in F&C International, Inc.

Riggers Inc (“Riggers, “client, or “Company”) is audited by Stone LLC CPA firm (“Stone” or “auditor”). The Compa” ” ny builds and owns offshore drilling rigs. Riggers is a US-based corporation that recently expanded its operations into Brazil (the only foreign-based operations for Riggers). As a result of this expansion, the client has encountered two complex issues related to accounting for income taxes. During the 2012 year-end audit, the auditors must use professional judgment with regard to these two income tax accounting issues. The first issue relates to

Due to the fact that corporations are separate legal entities from their owners, C-corporations are taxed separately requiring the filing of IRS Form 1120 each year to report its income and take advantage of any credits or deductions for which the corporation may be eligible (Internal revenue Service (IRS), 2012b). Income tax rates for corporation are tailored to corporations and as such are different from those

Crowe Horwath LLP is one of the largest public accounting, consulting, and technology firms in the United States. Under its core purpose of “Building Value with Values,” Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk, and performance services (Crowe Horwath LLP, 2016).

The Prefab Sprout Company is a construction company which develops and constructs modular home enclosures in South Florida. Though being listed on the New York Stock Exchange (NYSE), it is still a family-run business with about 40% of the shares resting with the Warner family. This working paper provides a thorough analysis of Prefab’s internal structure and its external business relations from an auditor’s viewpoint. In particular, the potential business and audit risks that could possibly evolve from an audit engagement are central to this study.