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ACC565 Week 3 Discussion 1 and Discussion 2




Question;ACC565 Week 3 Discussion 1 and 2ACC565 Week 3 Discussion 1Section 306 of the IRC was enacted by Congress to prevent tax avoidance;by distributing certain stock to a shareholder in a nontaxable stock dividend.;Section 306 prevents shareholders from using a preferred stock bailout to;convert ordinary income into a capital gain. Analyze the key provisions of;Section 306 of the IRC, and outline a tax- planning strategy geared toward;redeeming preferred stock with sale or exchange treatment as an alternative to;Section 306.ACC565 Week 3 Discussion 2Per;the text, the personal holding company (PHC) tax penalizes taxpayers that enter;into tax-motivated transactions designed to shelter passive income of closely;held corporations from higher individual tax rates. Suppose you represent a;professional athlete who is the majority owner of a corporation. The;corporation has several personal service contracts with advertising agencies;and endorsements for your client in addition to passive income. Propose a plan;in which you eliminate the potential for the PHC tax on the client?s;corporation.;The;same client provides significant information on passive income at the end of;the year, creating a potential PHC tax liability. Outline a plan for the;current year in which you reduce the total tax liability for the client and;include a proposal for future years to prevent PHC tax liability


Paper#57351 | Written in 18-Jul-2015

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