Tax File Memorandum1

Tax File Memorandum1 - DeVry University Acct 429 TAX...

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DeVry University Acct 429 TAX RESEARCH MEMORANDUM ASSIGNMENT 1 One of your clients is an incorporated funeral home, Peaceful Pastures Funeral Home, Inc. (“Peaceful”). Peaceful, an accrual basis taxpayer provides a full line of funeral services and sells goods related to those services. Over the last few years, however, the cost of these goods and services has risen dramatically. As a result, more of Peaceful’s customers have had difficulties paying their bills or have selected goods and services that cost less, sharply impacting Peaceful's bottom line. As a result, Peaceful has attempted to design an approach that allows customers to prepay for their funeral goods and services. Under this program, the customer pays in advance for the goods and services that will be provided at the time of their death, often at a significant discount. Under the terms of the contract, the payments are refundable at the contract purchaser's request any time until the goods and services are provided to them. Given that it is an accrual basis taxpayer, Peaceful has included these payments and income for the year the funeral service is provided. This year, the IRS sent Peaceful an audit notice. It contends that the amount prepaid
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This note was uploaded on 03/18/2012 for the course BUS 414 taught by Professor Keller during the Spring '11 term at DeVry Arlington.

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Tax File Memorandum1 - DeVry University Acct 429 TAX...

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