ACC 700 Milestone Three Guidelines and Rubric
The third milestone is a rough draft of the third artifact for your professional portfolio, a tax memo. The tax memo is broken up into two parts: Tax Memo I is a
personal income tax preparation and Tax Memo II is a corporate tax memo. This will be graded using the rubric at the end of this document and is an opportunity
for you to organize your thoughts and receive feedback from your instructor for the final submission. Note that the submission guidelines for this milestone are
less demanding than those for the final submission. Once you have submitted this milestone and received feedback from your instructor, it is up to you to
incorporate this feedback and complete the artifact by meeting the submission requirements found in the Final Project Guidelines and Rubric document.
Client Three – Ms. Emma Shire (Tax Memo)
Ms. Emma Shire is a client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional tax memo and appendix for her by analyzing business and
individual tax situations. Ms. Shire has questions and concerns about her personal income taxes, as well as taxes as they relate to her role in a partnership with
Marlene Anderson. She also works at Clifford Co., a large organization set up as a corporation, and has questions about their tax preparation. You will work with
Ms. Emma Shire to provide her with guidance on her questions related to personal, partnership, and corporate tax situations. You will need to apply income tax
regulations in solving problems and recommending courses of action that will comply with regulations and, at the same time, result in the best economic solution
for Ms. Emma Shire.
Artifact Three: Tax Memo I Information for Personal Income Tax Preparation
Ms. Shire has provided you with the following information to prepare her personal income tax return for 2014.
Emma Shire lives at 5258 Mountain Skies Road, College Park, MD 20742. She is a human resource manager at Clifford Company, 896 Western Avenue, College
Park, MD 20742 (employer identification number XX-1111111). She is also a 50/50 partner in a local clothing boutique. Ms. Shire is divorced and has two small
children, Kelly Shire (DOB 2/3/2012) and Jordan Shire (DOB 5/19/2006).
Ms. Shire was born on January 14, 1976, and her Social Security number is 123-45-6789. She does not want to contribute $3 to the Presidential Election
Campaign Fund.
The following information is shown on Ms. Shire’s 2014 Wage and Tax Statement (Form W–2):
Line Description Amount
1 Wages, tips, other compensation $65,000.00
2 Federal income tax withheld 10,500.00
3 Social Security wages 65,000.00
4 Social Security tax withheld 4,030.00
5 Medicare wages and tips 65,000.00
6 Medicare tax withheld 942.50
15 State: Maryland
16 State wages, tips, etc. 65,000.00
17 State income tax withheld 1,650.00
Additional Information:
Received interest of $1,750 from Maryland Federal Savings and Loan Association and $250 from Maryland State Bank. Each financial institution reported
the interest income on a Form 1099–INT
Received qualified dividends of $600 from Blue Corporation, $750 from Green Corporation, and $368 from Orange Corporation. Each corporation
reported dividend payments on a Form 1099–DIV.
Received child support of $15,000 during the year.
Received a $900 income tax refund from the state of Maryland on April 29, 2014.
Reported total itemized deductions of $10,200 on 2013 federal income tax return, which included $2,200 of state income tax withheld by her employer.
Received K-1 indicating her share of the clothing boutique’s ordinary business income (loss) – Line 1 is $23,580. No guaranteed payments were made or
dividends were received by the partnership.
Acquired 100 shares of Ace Corporation common stock for $30 a share on January 12, 2014. She sold the stock on December 19 for $55 a share.
Paid $1,300 for prescription medicines and $1,875 in physician and hospital bills. Medical insurance premiums were paid by her employer.
Paid real property taxes of $1,675 on her personal residence and interest on her home mortgage was $4,285, and interest paid to credit card companies
totaled $360.
Contributed $25 each week to her church and $15 each week to United Way.
Paid $1,500 in estimated federal income taxes throughout the year.
Artifact Three: Tax Memo II Corporation Issue
Clifford Company has encountered the following issue:
The company would like to make a property distribution (dividend) of the three machines that it uses in its business. It no longer needs two of these machines.
All three machines have a fair market value of $20,000 each. The basis of each machine is as follows: Machine A, $27,000; Machine B, $20,000; and Machine C,
$12,000. The corporation has asked you for advice. What do you recommend?
Your final portfolio artifact is the comprehensive, professional tax memo and appendix that you develop for Ms. Emma Shire, another client at S.N.H.U., LLC. As
you did with the previous two artifacts, make sure to incorporate the feedback that you receive from your instructor and peers.
Memo: You will justify recommendations and explain potential issues and future decisions relating to Ms. Shire’s tax situations. Given that Ms. Shire is not well
versed in accounting, make sure that your memo addresses her concerns in language that she can understand.
Address Ms. Shire’s questions pertaining to personal tax planning. Based on her given information, what actions can Ms. Shire take throughout the year
to effectively reduce her tax liability? Provide specific recommendations, defend them with tax regulations, and explain the tax consequences or savings
in conceptual and dollar value terms.
Address Ms. Shire’s questions pertaining to her partnership income. Based on the given information, what actions can Ms. Shire take throughout the
year to effectively reduce her tax liability from the partnership? What are the tax consequences to Ms. Shire if she and her partner choose to change
their business to a corporation? Provide specific recommendations, defend them with tax regulations, and explain the tax consequences or savings in
conceptual and dollar value terms.
Address Ms. Shire’s questions pertaining to Clifford Co.’s tax preparation. Provide specific recommendations, defend them with tax regulations, and
explain the tax consequences or savings in conceptual and dollar value terms.
Supporting documents should include, but are not limited to: a completed tax return, tax schedules, and tax forms.
Guidelines for Submission: Tax Memo I should be submitted as a one- to two-paragraph summary in a Microsoft Word document with double spacing, 12-point
Times New Roman font, one-inch margins, and at least two sources cited in APA format. Round all answers up to the nearest dollar value in any calculations.
Tax Memo II should be submitted as a one- to two-paragraph summary in a Microsoft Word document with double spacing, 12-point Times New Roman font,
one-inch margins, and at least two sources cited in APA format.
Note that this milestone is a rough draft and the submission guidelines are different for the final draft of the memos. Tax Memo I will be two to three pages in
length and Tax Memo II will be one to two pages in length with at least three sources. Refer to the submission guidelines in the Final Project Guidelines and
Rubric document.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.
Critical Elements Proficient (100%) Not Proficient (0%) Value
Personal Tax
Planning
Identifies specific actions to reduce Ms. Shire’s tax liability;
provides recommendations supported with tax regulations
with an explanation of the consequences or savings in
conceptual terms and dollar values
Does not identify specific actions to reduce Ms. Shire’s tax
liability; does not provide recommendations supported with
tax regulations or an explanation of the consequences or
savings in conceptual terms and dollar values
30
Partnership Income Identifies actions for Ms. Shire to reduce her tax liability
from her partnership, includes tax consequences if Ms. Shire
and her partner change to a corporation, and provides
recommendations supported with tax regulations with an
explanation of the consequences or savings in conceptual
terms and dollar values
Does not identify actions for Ms. Shire to reduce her tax
liability from her partnership, include tax consequences if
Ms. Shire and her partner change to a corporation, provide
recommendations supported with tax regulations, or provide
an explanation of the consequences or savings in conceptual
terms and dollar values
30
Clifford Co.’s Tax
Preparation
Provides recommendations pertaining to Clifford Co.’s tax
preparation supported with tax regulations and an
explanation of the consequences or savings in conceptual
terms and dollar values
Does not provide recommendations pertaining to Clifford
Co.’s tax preparation supported with tax regulations or an
explanation of the consequences or savings in conceptual
terms and dollar values
30
Articulation of
Response
Submission has no major errors related to citations,
grammar, spelling, syntax, or organization
Submission has critical errors related to citations, grammar,
spelling, syntax, or organization that prevent understanding
of ideas
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