Instructions: Due Sunday 03/23
Using current literature, complete the case titled “Small Business Flatiron Case” attached above. You will need to down load the case and answer the questions given. Some hints for this case are as follows:
I
· Use the §§351 and 1239 rules to compute the gain/loss recognized due to the capital contributions by Robert and Elizabeth.
· How are Elizabeth’s services treated by Flatirons for federal income tax purposes?
· Compute the corporation’s basis in the assets that it received from Robert.
II
· The deduction for expenses of an office in the home are found in §280H.
· Robert might also be able to deduct some §162 travel expenses.
· How would Flatirons and the employees be treated if an “accountable plan” were used for the expense reimbursements? A “nonaccountable plan”?
III
· Should Flatirons capitalize or deduct the costs of cleaning up the environmental contamination to the groundwater?
· Does the Flatirons clean-up operation put the land to a new or different use, extend the property’s useful life, or increase its value?
Prepare a written case study analysis for the above assigned research case, minimum of 3-4 pages. The case analysis must be fully annotated with citations in proper legal form.
