Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 1 of 5
Purpose: The purpose of this is to enable you to meet the following
goals:
• Understand the role of a tax practitioner
• Identify the tax issues involved in a scenario
• Be able to conduct comprehensive tax research utilizing on-line tools in order to
formulate a solution to the issues raised.
• Be able to articulate and defend a tax position in writing.
Task: In order to successfully complete this assignment you must:
• Prepare a memorandum to the tax manager outlining the information you found
in your research.
• Format the memo to include:
o Restatement of Facts (paraphrase)
o Identify at least three main issues based on these facts
o Provide a conclusion for each issue
o Include the analysis that led you to the conclusion for each issue. This
analysis should refer to the primary authority that best addresses the
issue.
o Primary authority would include items such as the Internal Revenue
Code, Regulations, Court Cases, etc. These also should be paraphrased
in order to highlight your understanding of the primary authority and
how it relates specifically to the issue. IRS Topics and Publications are
NOT primary authority for this project.
• Submit the assignment using a Turnitin assignment dropbox.
o Turnitin, is an online resource that checks your work against: the submissions of
others, books, articles, tax code, etc., in order to verify originality of your
content. Given that everyone in the course is working on the same problem and
using the same format, the service will likely find some similarity in your
paper. Upon submission you will be able to see your score immediately, as
others submit their papers your score may increase. Should you resubmit your
paper, the originality score will not be viewable for 12-24 hours.
o I use the information supplied by TurnItIn as well as my professional judgment to
determine the originality of your paper. A high similarity rating is an indication of either
plagiarism or insufficient original content. Plagiarism is a serious issue which would be a
violation of the student code of conduct and would be reported to Student Affairs.
o I will accept late assignments for no more than 48 hours after the due date, with a 20%
penalty.
Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 2 of 5
The writing assignment will be graded based on grammar, style of writing, logical development of
ideas, critical thinking skills, and technical accuracy of the analysis and conclusions, using a
rubric, which is found below.
Rubric to be used for grading
Expert Average Novice
Content
35 points
35
Contains ALL of the
following:
-All issues identified and
thoroughly analyzed;
-Conclusion and/or
recommendation
offered
32
Contains ANY of the
following:
Identifi ...
On a blog site, httpcuriosity.discovery.comquestionsuperhuman.docx
Mimi’s Cupcakes Tax Research Memorandum Due Date Wednesda
1. Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 1 of 5
Purpose: The purpose of this is to enable you to meet the
following
goals:
• Understand the role of a tax practitioner
• Identify the tax issues involved in a scenario
• Be able to conduct comprehensive tax research utilizing on-
line tools in order to
formulate a solution to the issues raised.
• Be able to articulate and defend a tax position in writing.
Task: In order to successfully complete this assignment you
must:
• Prepare a memorandum to the tax manager outlining the
information you found
in your research.
• Format the memo to include:
o Restatement of Facts (paraphrase)
2. o Identify at least three main issues based on these facts
o Provide a conclusion for each issue
o Include the analysis that led you to the conclusion for each
issue. This
analysis should refer to the primary authority that best
addresses the
issue.
o Primary authority would include items such as the Internal
Revenue
Code, Regulations, Court Cases, etc. These also should be
paraphrased
in order to highlight your understanding of the primary
authority and
how it relates specifically to the issue. IRS Topics and
Publications are
NOT primary authority for this project.
• Submit the assignment using a Turnitin assignment dropbox.
o Turnitin, is an online resource that checks your work against:
the submissions of
others, books, articles, tax code, etc., in order to verify
originality of your
content. Given that everyone in the course is working on the
same problem and
using the same format, the service will likely find some
similarity in your
paper. Upon submission you will be able to see your score
immediately, as
others submit their papers your score may increase. Should you
resubmit your
paper, the originality score will not be viewable for 12-24
hours.
3. o I use the information supplied by TurnItIn as well as my
professional judgment to
determine the originality of your paper. A high similarity
rating is an indication of either
plagiarism or insufficient original content. Plagiarism is a
serious issue which would be a
violation of the student code of conduct and would be reported
to Student Affairs.
o I will accept late assignments for no more than 48 hours after
the due date, with a 20%
penalty.
Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 2 of 5
The writing assignment will be graded based on grammar, style
of writing, logical development of
ideas, critical thinking skills, and technical accuracy of the
analysis and conclusions, using a
rubric, which is found below.
Rubric to be used for grading
Expert Average Novice
4. Content
35 points
35
Contains ALL of the
following:
-All issues identified and
thoroughly analyzed;
-Conclusion and/or
recommendation
offered
32
Contains ANY of the
following:
Identified most of the
relevant issues.
Conclusions not
offered for each issue
28-0
Contains ANY of the
following:
Several relevant issues
not addressed
No conclusions offered
Insufficient original
content
Complete-
ness
5. 20 points
20
Contains ALL of the
following:
-Thorough analysis
-Proper primary
authority citation used
including items other
than code sections.
17
Contains ANY of the
following:
-Good Analysis most
issues addressed
-Most issues contain
primary authority of
Code Sections.
15-0
Contains ANY of the
following:
-Did not research
important issues;
-Incomplete analysis;
-Primary authority not
cited.
-Insufficient original
content.
Readability
25 points
25
6. Contains ALL of the
following:
-Well written easy to
follow clearly discusses
issues;
-Followed
recommended format.
22
Contains ANY of the
following:
-Some areas include
awkward wording or
phrasing;
-Grammatical errors;
-Did not follow
recommended format.
18-0
Contains ANY of the
following:
-Difficult to read
-Numerous
grammatical errors
-Insufficient original
content.
Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
7. Page 3 of 5
Your business tax client, Mimi Charpentier, operates a
successful sole proprietorship which sells cupcakes to retail
customers at three locations in Las Vegas. Mimi’s Cupcakes
does not carry any inventories, because of the nature of its
products. Mimi owns the three small buildings in which the
shops exist. One of the stores is slightly larger than the
others; it is Mimi’s original location, and it still is the site of
the kitchen and the loading dock where the Cupcakes trucks
daily pick up and deliver merchandise and supplies.
The work force of each store is the equivalent of 2.5 employees;
the employees are paid
reasonably well, and the low-pressure atmosphere of the typical
workday results in a very low
turnover rate. Mimi’s offers only one fringe benefit to the
employees – it encourages the
employees to use Health Savings Accounts for their medical
costs, and Mimi’s reimburses the
employee for the out-of-pocket deductible amounts, to a
$2,000 maximum per employee per calendar year.
Mimi's attorney, Gloria Willis, has urged Mimi to incorporate
the business, primarily because of the limited shareholder
liability associated with corporate status, and to facilitate a
business succession plan for the operation. After several
years of discussions, Mimi has agreed to go ahead with this
idea. She plans to take a sixty percent ownership interest in
the common stock of the new entity; twenty percent interests
will be made available to Mimi’s daughter Nancy, and to Joan
Price, the chief operating officer
of the business, who is not related to the other two
shareholders.
8. Mimi has operated the business as a cash basis sole
proprietorship since 2009, and she
anticipates incorporating the business on January 1 of next year.
A summarized projected
balance sheet for the business as of December 31 of this year is
attached.
I
Willis’ practice consists of general work with small business
clients. She is not by any means
conversant with the federal income tax rules as they apply to
individuals and C corporations. In
this process, Willis is concentrating on the establishment of the
new corporate entity, the
retitling of assets as they are transferred from the proprietorship
to the corporation, and the
mechanics of creating and issuing shares to the new
shareholders.
In your interviews with the three shareholders, you discover
that Mimi’s life expectancy is about
two years from the date of incorporation. Nancy recently
graduated from community college in
restaurant and hospitality management, with an emphasis in
financial recordkeeping. Joan is
about fifty years old, in good health, and planning to remain in
charge of operating decisions for
the three stores for the foreseeable future. Neither Mimi nor
Joan projects that the corporation
9. Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 4 of 5
would add a fourth store, nor would it expand outside of Las
Vegas, but the parties review these
issues at least once a year.
The proprietorship does not carry any debt; its trade
payables and receivables are disposed of in a timely
fashion. Its web site allows for remote ordering, scheduled
pickups, and deliveries of larger orders to customer
locations. Mimi’s is active on Twitter and Facebook, where
the company has about five thousand friends/followers.
This presence allows Mimi’s to plan and carry out
“spontaneous” outdoor events on the stores’ patios, where
high-markup products are made available in plentiful
quantities.
As Mimi has told you several times, “this is a simple business,
and we know how to keep our
customers happy and coming back on a regular basis. I do not
want the legal etc. aspects of an
incorporation to disrupt the good thing that we have here.” But,
in your dealings with Mimi
over the years concerning her Forms 1040 and employment tax
obligations, you know that she
expects you to give her suggestions about how her tax liabilities
would be affected by decisions
that she makes, and that she expects to “get it right the first
time” when she makes her choices.
10. At Mimi’s latest appointment with her cardiologist, Cathy
Duvall MD mentioned that her own
clinic was about to incorporate, but that Duvall would retain her
individual ownership of the
clinic’s land and building. Duvall was certain that there were
tax and legal advantages to
structuring the corporation that way, but she could not really
explain to Mimi what those
advantages were.
Required:
You will be meeting shortly with Mimi, Nancy, and Joan to
discuss the tax aspects of the
incorporation. Be sure to review the following items:
• Review the various options available for operating the
business and the tax
consequences of these options.
• Mimi certainly will ask you to cover the issue of which assets
to contribute to the new
corporation, with the explanations that Duvall could not
provide. Concentrate on those
issues for this meeting, offering at least two alternative plans
for the asset transfers be
sure to include computation of tax effect of the alternative
plans.
• At the meeting, Nancy will look to you for information on
issues of asset basis, as well as
any effects that the incorporation might have on sales/use and
self-employment tax
obligations.
11. • Ignore any exposure to the corporate or individual alternative
minimum tax.
• You should be prepared with some initial suggestions as to
succession planning and the
tax implications related to transfer of the shares in Mimi’s
Cupcakes Inc.
Mimi’s Cupcakes Tax Research Memorandum
Due Date: Wednesday, December 2, 2020 at 11:59 pm
Page 5 of 5
Projected Balance Sheet ($K)
Mimi Charpentier, dba Mimi’s Cupcakes
December 31
Original(Cost Tax(Basis
Fair(Market(
Value
Cash 10 10 10
Displays,(furniture 30 20 20
Office(equipment,(financial(records 5 0 5
Trucks 80 25 35
Land,(buildings 950 490 785
Mimi's(recipe(database 0 0 80
24. the client’s file and be reviewed and used by someone
unfamiliar with the case.
Issue & Conclusion #1
Issue: State the most important issue in the form of a question?
Conclusion: Answer to the question above in one to two
sentences.
Analysis 1
Explain here how you came to the conclusion above, relate back
to the case and be sure to cite primary authority. Explain how
that primary authority relates to the facts of this case. For
example if you find a court case where the court findings are
helpful to your argument explain how the facts in that case are
similar to the facts of the client. This should be at least a
paragraph or two in length for each source. At least one
primary source per issue, all citations included in the memo
inline. Inline citation example: “Pursuant to IRC§123 income
earned by a taxpayer which is not related to blah blah blah
would be taxable.” Repeat the same process for each issue.
Issue & Conclusion #2
Issue:
Conclusion:
Analysis 2
Issue & Conclusion #3
Issue:
Conclusion:
Analysis 3
Issue & Conclusion #4
Issue:
Conclusion:
Analysis 4
Issue & Conclusion #5
Issue:
Conclusion:
Analysis 5
