S Corp Research Paper

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Required Research Problem S Corporations Instructions: You should prepare a legal memorandum to your client providing tax advice on the proposal set forth here. Be sure to include citations to code sections, regulations and other authorities that you rely upon in reaching your conclusion. The paper generally runs about two to three pages and is due the last day of class or May 10, 2011.. Facts: Your client is Android Cellar who operates a successful computer consulting business as an S Corporation. Android is the sole owner of the S Corporation. He employs two workers (Geeko and Byte) who work with him in this business. Android works from home so he employs a Nanny (called Analog) to take care of his two children. He…show more content…
Analog worked 1,500 hours during 2010. Analog was paid $10 per hour. Android offers a major medical plan and a dental plan to his employees who work over 1,000 hours per year. Android has offered this benefit for the entire year 2010. Android pays 50% of the premium cost for the major medical plan for single coverage. This means that the amount paid by Android is limited to 50% of the cost of single coverage even if the employee has a family and elects more expensive family coverage. Android’s plan has a premium cost of $6,000 for single and $14,000 for family coverage. Android pays $3,000 for Geeko and Byte who are single and $3,000 for Analog who is married with a family (Total payment of $9,000). That means that Geeko and Byte each pay $3,000 for coverage under the plan, and Analog pays $11,000 for coverage under the plan (if she elects family coverage). Android paid $14,000 for his own family coverage. Android pays 40% of the premium cost of the dental plan. The dental plan premiums are $1,000 for single and $2,000 for family coverage. Android pays $400 for Geeko, Byte and Analog. Geeko and Byte each pay $600 for coverage and Analog pays $1,600. Android paid $2,000 for his own family coverage. You do not need to consider any state credits or other state subsidies. Required: Determine the total credit available to the S Corporation in 2010 under IRC 45R (Small Business Health Care Tax Credit). You should specifically compute each of
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