ACC 665 Grand Canyon Week 1 Complete Work


ACC 665 Grand Canyon Module 1 Discussion 1

Discuss some of your initial apprehensions surrounding working with your CLC team and client Dave Novell throughout the course. Upon review of the case, what predictions can you make concerning the outcome of the case as it relates to Dave, his businesses, and family situation? What suggestions and/or resources can you offer your classmates for collaborating and completing the case study reports in a professional manner?

ACC 665 Grand Canyon Module 1 Discussion 2

A taxpayer uses borrowed funds to acquire no dividend-paying corporate stock. Note that interest on borrowed funds may be deducted in the period paid, up to the amount of net investment income from other stocks or investments (that is, interest and dividend income). Discuss the tax consequences of this plan and support your response by referencing a relevant reading and/or other supplemental material

ACC 665 Grand Canyon Wee k 1 Assignment

Tax Planning and Business Strategy Case Study

ACC 665 Grand Canyon Week 1 Case Guidelines

Throughout the case, you may assume that events described unfold over a period of several years, as your client, Dave Novell progresses through life and each module is viewed as a different point in his life, in which his business and private affairs change and evolve. Your task is to assume the role of an accountant and member of an accounting team at a local firm assigned to work with Dave and apply your understanding of tax strategies and regulations to address and resolve issues concerning his tax obligations and liabilities.

Background Information

Dave Novell is a divorced parent with custody of his two children. Dave is an owner-employee with “On-Off-Shore Searchers, LLC” (OOSS). He and his children reside in Phoenix, AZ. When they were young, his children lived with their mother, even though he provided over 50% of their support. OOSS is a Louisiana registered LLC and based in Houma, Louisiana. It operates six drilling rigs now. Adam works a regular 2-weeks-onshore and 2-weeks-offshore schedule.

His prior tax preparer and advisor died unexpectedly. Unfortunately, the tax preparer was a sole practitioner and there was no one to continue the tax services to Dave. His stockbroker recommended ACC 665 GCU you and your accounting firm to advise him and his family on his tax obligations and liabilities.

During the onshore weeks, Dave also manages a small business in Phoenix ACC665 operating under the name of “Diamond Discovery,” a 100% owned small business that develops new musical talents. He operates this currently as a regular Schedule C business. You discover that his ex-wife, Diane, works in this business, he paid for the completion of her education in addition to paying for her house, in which she and the two children previously resided, and he has done this for many years. Once she had completed her education and had become employed, the divorce settlement required the house to be sold and the proceeds, net of the loan payoff, to be divided equally between the two individuals. This has not been done.

Documents Left by the Deceased Tax Preparer Contain the Following Information:

• On prior tax returns, he has deducted his mileage round-trip between Phoenix and Houma as a no reimbursed business expense.

• Diane does not receive a W-2 or a Form 1099-Miscellaneous for the weekly cash stipend of $500 received from Diamond Discovery, Inc.

• Dave is vague as to if and how the stipend was handled by the deceased tax preparer.

• A review of prior tax returns does not reveal any information about this issue. However, Dave claims that he has always deducted it.

• Dave had converted Diamond Discovery to a corporate structure on November 20 of the prior year. However, the prior year returns provided by him consisted only of Dave’s 1040.

• Dave claims that Diamond Discovery was to be established as an S-Corp. with him as 100% owner. No records from the deceased tax preparer files show this was filed.

• W-2 from OOSS has the following:

o Gross, Box 1, Income, $125,000.

o Federal income tax withheld, Box 2, $21,300

o Social Security Income, Box 3, $106,800

o Medicare Income, Box 5, $125,000

o All Social Security and Medicare taxes were withheld

o Arizona income, $125,000

o Arizona withholding, $5,250

ACC 665 Grand Canyon Week 1 Complete Work

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