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2015-06-17 来源: 51due教员组 类别: 更多范文
商业计划和税收管理备忘录
To: Tax Manager
From: Research Department Staff
Re: Eric Stottlemeyer
Date: October 1, 2014
Eric Stottlemeyer, our client, decided to take a fishing trip in 2015 with his key employees and customers so that he can build a stronger business relationship. By the end of 2014, Eric Stottlemeyer paid $5,800 for flying lessons and rental for the plane. In addition, he spent $1,900 to maintain an aircraft which costs $100 per hour interval. And in 2013, Eric received a $20,000 deposit from an international customer. The customer wanted Eric’s business to provide “on-demand” services. However, the customer has not contacted Eric since returning to his native country. Eric has been unable to contact the customer without returning the deposit.
TAX ISSUES
Firstly, Eric needs to figure out whether he can deduct the cost of the fishing trip. Obviously, the fishing trip aims to create a more positive, personalized business relationship besides fishing. Therefore, it is not limited in entertainment but also transaction related, which means that the cost during the trip should be added to taxable issue. In addition, Eric should consider about whether his employees and customers have taxable income from their participation in the trip.
Secondly, Eric’s international customer has never shown up again and lost contact since he send the deposit to Eric. And meanwhile, Eric is reluctant to spend deposits, thinking it will be returned. Eric should consider about whether the deposit is subject to tax.
Thirdly, Eric’s payment for the flying lessons is part of preparation for his business. Therefore, it can be included in tax issues.
The trip: contain deductable cost or not?
Of initial concern is whether the trip qualifies as a trade or business associated one. For the trip to be considered business associated, the cost of the trip must be meet the requirement of both §162 and §274.
If a business associate travels with taxpayer and meets the conditions where the person he or she go with has a bona fide business purpose for the travel, and would otherwise be allowed to deduct the travel expenses a taxpayer can deduct the travel expenses he or she have for that person. On the one hand, a business associated trip is one that includes the target to conduct business. A business associate can be a current or prospective to become taxpayer's customer, client, supplier, employee, agent, partner, or professional advisor. On the other hand, a bona fide business purpose exists if taxpayer can prove a real business purpose for the individual’s presence. Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Accordingly, Eric wants to make a successful transaction during the trip. Therefore, he should clearly record the expenses incurred as the business trip.
David H. Garza V. Commissioner [T.C. Memo 2014-121] is one of examples where a business traveler was formally asked to properly pay the tax for business income tax. Before the judgment, the income earned from and costs pay for the company’s business trip were not clearly stated. As a result, the company was finally considered as taxation evasion. For Eric, he should be concern about the person he takes with during the trip so that he can pay tax according to IRS properly. Besides, the business deal done during the trip should be included in taxable income.
One of the focuses of Sivatharan Natkunanathan V. Commissioner [T.C. Memo 2010-15] is whether petitioner is entitled to business expense deduction for meals and entertainment, advertisement, rent, and utilities expenditures in excess of those respondents allowed or conceded. The court finally judges that it will not allow the deduction of a claimed expense even where taxpayer is unable to fully substantiate it.
A trade or business expense is ordinary if it is normal or customary within a particular trade, business or industry and is necessary if it is appropriate and helpful for the development of the business. According to Commissioner v. Heininger, 320 U.S. 467, 471(1943) and Deputy v. du Pont, 308 U.S. 488, 495 (1940), “personal, living, or family expenses” are generally nondeductible. Eric should let his employees record the specific classification of the expenses used in the trip so that his company can figure out the deductable and nondeductible expenses.
Flying lessons – training fee
Because the flying lessons Eric took was a consideration of better development of the relative business, the costs should be regarded as part of the expense of the company. The training fee can therefore be deducted in taxable income. These expenses are only deductible if they are used for present work, so training that qualifies an employee for a promotion or a new job cannot be claimed on income tax returns. The tuition and fees deduction can be claimed alongside the business expense deduction for work-related education. According to Section 162, taxpayer incurred flight training expenses can be deductible.
International customer’s deposit
Eric’s international customer expected Eric’s business to provided maintenance “on-demand” whenever the customer’s aircraft out of US airports. And Eric finally made a deal with the international customer and then learns that the international customer may not be involved in legal activities and may actually results in incarceration. So, the question is: the deposit is a taxable income or not?
As stated in Eugene Amos, JR. V. Commissioner [T.C. Memo 2003-329], the deposit of $200,000 for the company is considered as part of the income for the company although the services haven’t been put forward. The deposit needs to be regarded as prepaid income for the future service. Since the international customer use the deposits as fee for future cooperation, these deposits should be part of the income for Eric’s company and included in taxable income that year.
According to IRS, prepaid income, such as compensation for future services, is generally included in taxpayer's income in the year he or she receive it. However, if taxpayer uses an accrual method of accounting, he or she can defer prepaid income he or she received for services to be performed before the end of the next tax year. In this case, taxpayers include the payment in their income as they earn it by performing the services. So, if Eric uses an accrual method of accounting, he can include the $20,000 in his income in 2014. Otherwise, he should include the $20,000 in his income in 2013. All in all, the deposit is a taxable income.
CONCLUSION
It should be clear after the discussion and facts above, Eric Stottlemeyer should make a more specific plan on his trip with his key employees and main customers because he has an ambition to finish a business deal during the trip. Besides, he is looking forward to set up more business relationship during the trip so that his career can be explored. Therefore, some income from the trip must be taxable income; he should be aware with them and takes a good control on the business. Furthermore, the cost during the trip can be deducted due to the regulation of the IRS and this should be considered as acceptable and reasonable tax avoidance.
51Due网站原创范文除特殊说明外一切图文著作权归51Due所有；未经51Due官方授权谢绝任何用途转载或刊发于媒体。如发生侵犯著作权现象，51Due保留一切法律追诉权。
To: Tax Manager
From: Research Department Staff
Re: Eric Stottlemeyer
Date: October 1, 2014
Eric Stottlemeyer, our client, decided to take a fishing trip in 2015 with his key employees and customers so that he can build a stronger business relationship. By the end of 2014, Eric Stottlemeyer paid $5,800 for flying lessons and rental for the plane. In addition, he spent $1,900 to maintain an aircraft which costs $100 per hour interval. And in 2013, Eric received a $20,000 deposit from an international customer. The customer wanted Eric’s business to provide “on-demand” services. However, the customer has not contacted Eric since returning to his native country. Eric has been unable to contact the customer without returning the deposit.
TAX ISSUES
Firstly, Eric needs to figure out whether he can deduct the cost of the fishing trip. Obviously, the fishing trip aims to create a more positive, personalized business relationship besides fishing. Therefore, it is not limited in entertainment but also transaction related, which means that the cost during the trip should be added to taxable issue. In addition, Eric should consider about whether his employees and customers have taxable income from their participation in the trip.
Secondly, Eric’s international customer has never shown up again and lost contact since he send the deposit to Eric. And meanwhile, Eric is reluctant to spend deposits, thinking it will be returned. Eric should consider about whether the deposit is subject to tax.
Thirdly, Eric’s payment for the flying lessons is part of preparation for his business. Therefore, it can be included in tax issues.
The trip: contain deductable cost or not?
Of initial concern is whether the trip qualifies as a trade or business associated one. For the trip to be considered business associated, the cost of the trip must be meet the requirement of both §162 and §274.
If a business associate travels with taxpayer and meets the conditions where the person he or she go with has a bona fide business purpose for the travel, and would otherwise be allowed to deduct the travel expenses a taxpayer can deduct the travel expenses he or she have for that person. On the one hand, a business associated trip is one that includes the target to conduct business. A business associate can be a current or prospective to become taxpayer's customer, client, supplier, employee, agent, partner, or professional advisor. On the other hand, a bona fide business purpose exists if taxpayer can prove a real business purpose for the individual’s presence. Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Accordingly, Eric wants to make a successful transaction during the trip. Therefore, he should clearly record the expenses incurred as the business trip.
David H. Garza V. Commissioner [T.C. Memo 2014-121] is one of examples where a business traveler was formally asked to properly pay the tax for business income tax. Before the judgment, the income earned from and costs pay for the company’s business trip were not clearly stated. As a result, the company was finally considered as taxation evasion. For Eric, he should be concern about the person he takes with during the trip so that he can pay tax according to IRS properly. Besides, the business deal done during the trip should be included in taxable income.
One of the focuses of Sivatharan Natkunanathan V. Commissioner [T.C. Memo 2010-15] is whether petitioner is entitled to business expense deduction for meals and entertainment, advertisement, rent, and utilities expenditures in excess of those respondents allowed or conceded. The court finally judges that it will not allow the deduction of a claimed expense even where taxpayer is unable to fully substantiate it.
A trade or business expense is ordinary if it is normal or customary within a particular trade, business or industry and is necessary if it is appropriate and helpful for the development of the business. According to Commissioner v. Heininger, 320 U.S. 467, 471(1943) and Deputy v. du Pont, 308 U.S. 488, 495 (1940), “personal, living, or family expenses” are generally nondeductible. Eric should let his employees record the specific classification of the expenses used in the trip so that his company can figure out the deductable and nondeductible expenses.
Flying lessons – training fee
Because the flying lessons Eric took was a consideration of better development of the relative business, the costs should be regarded as part of the expense of the company. The training fee can therefore be deducted in taxable income. These expenses are only deductible if they are used for present work, so training that qualifies an employee for a promotion or a new job cannot be claimed on income tax returns. The tuition and fees deduction can be claimed alongside the business expense deduction for work-related education. According to Section 162, taxpayer incurred flight training expenses can be deductible.
International customer’s deposit
Eric’s international customer expected Eric’s business to provided maintenance “on-demand” whenever the customer’s aircraft out of US airports. And Eric finally made a deal with the international customer and then learns that the international customer may not be involved in legal activities and may actually results in incarceration. So, the question is: the deposit is a taxable income or not?
As stated in Eugene Amos, JR. V. Commissioner [T.C. Memo 2003-329], the deposit of $200,000 for the company is considered as part of the income for the company although the services haven’t been put forward. The deposit needs to be regarded as prepaid income for the future service. Since the international customer use the deposits as fee for future cooperation, these deposits should be part of the income for Eric’s company and included in taxable income that year.
According to IRS, prepaid income, such as compensation for future services, is generally included in taxpayer's income in the year he or she receive it. However, if taxpayer uses an accrual method of accounting, he or she can defer prepaid income he or she received for services to be performed before the end of the next tax year. In this case, taxpayers include the payment in their income as they earn it by performing the services. So, if Eric uses an accrual method of accounting, he can include the $20,000 in his income in 2014. Otherwise, he should include the $20,000 in his income in 2013. All in all, the deposit is a taxable income.
CONCLUSION
It should be clear after the discussion and facts above, Eric Stottlemeyer should make a more specific plan on his trip with his key employees and main customers because he has an ambition to finish a business deal during the trip. Besides, he is looking forward to set up more business relationship during the trip so that his career can be explored. Therefore, some income from the trip must be taxable income; he should be aware with them and takes a good control on the business. Furthermore, the cost during the trip can be deducted due to the regulation of the IRS and this should be considered as acceptable and reasonable tax avoidance.
Also, Eric should report the deposits from the international customer whether it would come back or not. And he should consider setting up the foreign financial account so that it can be considered as a reasonable income. This can release him from the punishments from the IRS and protect the reputation of his company. Moreover, the deposit from the international customer should be included in taxable income as the requirement of IRS.
51Due网站原创范文除特殊说明外一切图文著作权归51Due所有；未经51Due官方授权谢绝任何用途转载或刊发于媒体。如发生侵犯著作权现象，51Due保留一切法律追诉权。
