Tax File Memorandum Essay

By July 25, 2017 Engineering

Subject: Peaceful Pastures Funeral Home. Inc. ( Peaceful ) IRS Audit Notice Today I met with Peaceful to discourse the IRS audit notice they received sing the coverage of income from Peaceful’s postpaid plan. Fact: Peaceful does non describe payments received from a preneed contract as income until the twelvemonth in which the funeral service is provided. Peaceful’s preneed contract allows for a refund of payments at the contract purchaser’s petition any clip until the goods and services are provided.

Issue: Should Peaceful include payments received from the postpaid plan as income for the twelvemonth in which they are received?

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Decision: Based upon the refund clause in the contract and the opinions in Comm. v. Indianapolis Power & A ; Light Co. and Perry Funeral Home. Inc. v. Commissioner. Peaceful should non hold to describe payments for its preneed plan as gross income in the twelvemonth in which they are received. Alternatively Peaceful should be allowed to describe the income in the twelvemonth in which the goods and services are delivered.

Analysis: In Perry Funeral Home. Inc. v. Commissioner ( Perry ) . the tribunal held “…payments received by P under its preneed funeral contracts are includable in gross income merely upon the proviso of the capable goods and services” . The tribunal to a great extent relied upon the determination of the Supreme Court in Comm. v. Indianapolis Power & A ; Light Co. ( 65 AFTR 2d 90-934 Justice Blackmum delivered the sentiment in which he stated. “… it does non hold the needed “complete dominion” over them sedimentations at the clip they are made. the important point for finding nonexempt income” and “… the chief intent of these sedimentations was to function as security instead than prepayment of income” . Under the footings of Peaceful’s contract. “the payments are refundable at the contract purchaser’s petition any clip until the goods and services are provided to them” . Additionally. Blackmum provinces. “The key is whether the taxpayer has some guaranteed that he will be allowed to maintain the money. ”By leting the buyer to find when the refund is collectible. Peaceful has no warrant they will be able to maintain the money.

November 18. 2012


FROM: Bobbette Barrett

Subject: MegaCorp. Inc. IRS Audit Notice.
Today I met with MegaCorp to discourse the IRS audit notice they received sing the coverage of $ 5million in amendss paid to Ideas. Inc.

Fact: MegaCorp purchased all of the assets of Little. Inc. MegaCorp besides acquired some of Little’s liabilities which included an alleged patent misdemeanor by Ideas Inc. MegaCorp agreed it would be lawfully responsible for any judgement that Little would hold to pay Ideas. A jury awarded Ideas $ 5 million in amendss. MegaCorp reported the payment as a tax write-off under §162.

Issue: Upon audit. the IRS reclassified the payment as a capital outgo under §263 and disallowed the tax write-off. Is MegaCorp entitled to the tax write-off?

Decision: MegaCorp is non entitled to the tax write-off and should add the judgment payment to the footing of geting Little. Inc.

Analysis: Section 162 ( a ) of the TRC allows for the tax write-off of “all ordinary and necessary disbursals paid or incurred during the nonexempt twelvemonth in transporting on any trade or business” . Section 263 of the Code allows no tax write-off for a capital outgo. an “amount paid out for new edifices or for lasting betterments or improvements made to increase the value of any belongings or estate” .

In Illinois Tool Works Inc. et al v. Commissioner. the tribunal sentiment stated. “Generally. the payment of a liability of a predating proprietor of belongings by the individual geting such belongings. whether or non such liability was fixed or contingent at the [ pg. 45 ] clip such belongings was acquired. is non an ordinary and necessary concern expense… Alternatively. payment of such a liability is capitalized and added to the footing of the acquired belongings. ” In 93 AFTR 2d 2004-548 ( 355 F. 3d 997 ) . the tribunal provinces. “…our anterior case in point provinces that there is a “well- settled general regulation that when an duty is assumed in connexion with the purchase of capital assets. payments fulfilling the duty are non-deductible capital outgos.

Research Essay Assignment 1

1. Breitling Oil and Gas

The ground why they think people should put in oil is because everything revolves around these merchandises. It’s a natural resource and that the United States is seeking to command the supply of this merchandise.

The secret to plus grasp is to purchase in the way of growing. Oil is one of the most of import natural resources known to mankind. For most societies in the universe. oil is the chief natural resource that fuels their economic systems. Then why. in this great age of communicating and engineering. do we necessitate to be concerned about a natural resource like oil? Simple. About 98 % of everything you have or do is in some manner related to crude oil. Heat for your place. gas for your auto. 2 liter plastic bottles for dad. and crude oil jelly are merely a few illustrations of merchandises created from rough oil. The United States has the greatest criterion of life in the universe. every bit good as the largest economic system. Why? Because we have ever tried to keep control over the supply. every bit good as monetary value. of oil. Over the last 10 old ages. the U. S. economic system has undergone the largest economic enlargement in history and inexpensive oil has fueled this unprecedented growing. ( Faulkner ) Unlike the seventiess. when the U. S. was held at bay by OPEC keep backing oil production for political grounds. the growing of the oil industry during the 1990s. and beyond. will be more likely be determined by the Torahs of supply and demand.

As democracy and capitalist economy are distributing around the universe. planetary oil ingestion is at record degrees. Throughout Latin America. Russia. India and Asia. economic growing is speed uping at a singular gait ; much faster than anything we have seen in the U. S. Recently. Forbes described the development now detonating across Asia: You can about smell the money in Shanghai. Bangkok. Kuala Lumpau or merely about any East Asiatic commercial centre outside Japan these yearss. Traffic snarled. building booming. glitzy shopping promenades demoing the latest Hollywood movies… These once traditional societies. stagnant for centuries. are detonating into the modern capitalist universe and engendering huge new in-between categories with a gustatory sensation for consumer goods and the agencies to indulge that gustatory sensation.

Healthy economic sciences generate great wealth. and Asia is churning out billionaires as though on a conveyer belt. ” —Forbes. ( Faulkner ) In these states. more than two billion people. or more than 40 % of the world’s population. are all of a sudden come ining the age of consumerism. Thankss to American films. Televisions and VCRs. they have seen what the remainder of the universe has and they want it all. “They want McDonald’s French french friess. They want Coke. They want Levi denims. They want Caterpillar tractors. They want autos. cameras. gargle. places. toothpaste. Tide. acetylsalicylic acid and 10 thousand other merchandises we take for granted. “In huge parts of these states. they’re get downing from the natural rudimentss of modern life. They need electric power. running H2O. sewerage intervention workss. Bridgess. tunnels. roads. metropoliss — you name it.

“And oil is the one trade good perfectly indispensable to this tidal moving ridge of planetary growing. It’s literally the blood supply of capitalist economy. If you’re a underdeveloped state. you need all the oil you can acquire to drive your trucks. your autos. your planes and ships. You need oil to run your mills. machines and power workss so necessary to a modern industrial economic system. “What we’re visual perception is the first coincident. world-wide economic enlargement since the late seventiess. But this clip. many freshly industrialised states are fall ining the party and importing an ageless emanation of super-tankers loaded with black gold. ( Faulkner )


There are important hazards associated with puting in oil and gas ventures. The above information is for general intents merely and is non a solicitation to purchase or an offer to sell any securities. General information on this site is non intended to be used as single investing or revenue enhancement advice. Consult your personal revenue enhancement adviser refering the current revenue enhancement Torahs and their pertinence and consequence on your personal revenue enhancement state of affairs

hypertext transfer protocol: //www. breitlingoilandgas. com/investor-center/

2. Derek Oil and Gas Corp.

They tell investors on their web page that their portion construction alterations from month to month since everything either goes up or down depending on the economic system at that clip. They have safe and desirable North American locations. Another ground to put with them is expandible modesty and production on per portion footing.

Shares Outstanding 60m
Market Cap C $ 3. 26m
Convertible loan C $ 1. 6m

Derek Oil and Gas Corporation is a TSX-V Listed oil development and production company concentrating on the 8. 000 acre LAK Ranch field. in the Eastern border of the fecund Powder River Basin. Wyoming. about 7 stat mis from Newcastle and the Wyoming oil refinery. Derek. which had encountered jobs retrieving its heavy oil. is now positioned to profit from old investing and new direction with specializer cognition and experience in heavy oil. ( Couldrey ) The company has a 95 % working involvement and a 66 % net gross involvement in the drama.

A survey in 2005 by Ivanhoe Energy Inc. the so operator. credited the LAK Ranch with 33mmbo recoverable. In 2006 Ivanhoe decided to concentrate on their proprietary oil upgrading procedure and withdrew from the undertaking. selling their WI back to Derek. including a 4. 4 square mile high-resolution 3D seismal study carried out over the north part of the LAK Ranch belongings. This study has been instrumental in specifying the extent of the Newcastle Sandstone and besides defining possible chances in the deeper Fall River and Minnelusa Sandstones. No Wellss have yet been drilled into chances contained in these deeper stratigraphic units. ( Couldrey )


This papers has been distributed by S. P. Angel Corporate Finance LLP ( “SPA” ) . which is an appointive representative of SP Angel & A ; Co Ltd which is authorised and regulated by The Financial Services Authority and is a member of the London Stock Exchange and APCIMS. Some statements contained in this papers or in paperss referred to in it are or may be forwardlooking statements. Actual consequences may differ from those expressed in such statements. depending on a assortment of factors. Any advanced information contained in this papers has been prepared on the footing of a figure of premises that may turn out to be wrong. and consequently. existent consequences may change.

This papers does non represent an offer or invitation to subscribe for. or purchase. or dispose of any portions or other securities in. or any concern or assets of. any entity including Derek Oil and Gas Corporation. ( Couldrey ) Neither of SPA or Derek Oil and Gas Corporation makes any representation as to the truth. completeness or relevancy of the information or sentiments contained herein and consequently no representations or guarantees are made with respect thereto. Any party must trust upon his ain enquiries and probes. In add-on. the lone information that will hold any legal consequence will be that specifically represented in unequivocal purchase paperss. Consequently SPA or Derek Oil and Gas Corporation herewith exclude any liability to any individual in effect of his purported trust upon information contained herein or omitted herefrom ( whether express or implied ) or otherwise furnished in connexion herewith. ( Couldrey )

hypertext transfer protocol: //www. derekoilandgas. com

hypertext transfer protocol: //www. derekoilandgas. com/i/pdf/SPangelresearchapril09. pdf

3. Enterprise Merchandises

The ground why they want you to put with them is to non many spouses so you get more capital. They are the largest public trade company in the universe. They delivered record operating costs the last four old ages.

hypertext transfer protocol: //phx. corporate-ir. net/phoenix. zhtml? c=80547 & A ; p=irol-presentations2011


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