Imagine that you are a Certified Public
Accountant (CPA) with a new client who needs an opinion on the most
advantageous capital structure of a new corporation. Your client formed the
corporation in question to provide technology to the medical profession to
facilitate compliance with the Health Insurance Portability and Accountability
Act (HIPAA). Your client is very excited because of the ability to secure
several significant contracts with sufficient capital.
Use the Internet and Strayer databases to
research the advantages and disadvantages of debt for capital formation versus
equity for capital formation of a corporation. Prepare a formal letter to the
client using the six (6) step tax research process in Chapter 1 and
demonstrated in Appendix A of your textbook as a guide.
Write a one to two (1-2) page letter in which
you:
1.
Compare the tax
advantages of debt versus equity capital formation of the corporation for
the client.
2.
Recommend to the
client whether he / she should use debt or equity for capital formation of the
new corporation, based on your research. Provide a rationale for the response.
3.
Use the six (6) step
tax research process, locatedin Chapter 1 and demonstrated in Appendix A of
the textbook,to record your research for communications to
the client.
Your assignment must follow these formatting
requirements:
·
Be typed, double
spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format.
Check with your professor for any additional instructions.
·
Include a cover page
containing the title of the assignment, the student’s name, the professor’s
name, the course title, and the date. The cover page and the reference page are
not included in the required assignment page length.
The specific course learning outcomes
associated with this assignment are:
·
Analyze tax issues regarding
corporate formations, capital structures, income tax, non-liquidating
distributions, or other corporate levies.
·
Use technology and
information resources to research issues in organizational tax research and
planning.
·
Write clearly and
concisely about organizational tax research and planning using proper writing
mechanics.
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