Tax 6065 Spring 2010 Case #1 – 50 points Due Date: February 22, 2010 They Tax Mistakes Don’t They Facts: Leon Jackson, one of your largest clients, owns several businesses including Jackson Copies, Inc., a new business started in 2008. Leon asked your firm to set it up so that he could operate the business as an S corporation. Leon asked a staff member at your firm if he could issue 20% of the stock to Jackson Supplies, Inc (a C Corp). The staff member said, “No problem.” The IRS recently examined Leon’s personal and business tax returns for 2008, and properly invalidated the S election. The IRS concluded that the net tax increase will be $3,500. You have examined the computation by the IRS, and determined that it is correct. The IRS was not very understanding because Leon once before omitted income from his return. They say that both Leon and your firm should be more careful. Accordingly, they are demanding that Jackson Copies, Inc. pay the additional tax of $3,500, a penalty of $700, and interest of $400. Leon is pretty unhappy. He says that he came to your firm in order to stay out of
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This note was uploaded on 08/25/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Spring '08 term at University of Central Florida.