Create a recommendation for proposed adjustments, stock redemption, and future compensation based on a given scenario.

Instructions

Using the Internet to research the rules and income tax laws regarding unreasonable compensation, stock redemptions treated as dividends, and related party losses. Be sure to use the six-step tax research process as a guide for your written response.

Write a 3–4 page paper in which you:

  1. Based on your research and the facts stated in the scenario, prepare a recommendation for the client in which you advise either acceptance of the proposed adjustments or further appeal of the issue based on the potential for prevailing on appeal.
  2. Create a tax plan for the future redemption of the client’s stock owned in the construction company that will not be taxed according to Section 301 of the IRC.
  3. Propose a strategy for the client to receive similar amounts in compensation in the future and avoid the taxation as a constructive dividend.

The specific course learning outcome associated with this assignment is:

  • Create a recommendation for proposed adjustments, stock redemption, and future compensation based on a given scenario.