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Posted: June 20th, 2020

Calculate tax issues and write a letter about ethics

Assessment Brief Tax Issues/Ethics Letter Assume a relative asks for your tax advice (after all, you told them to "just ask!"), or assume you are responding to a client as you write a letter on one of the following cases. For each case, identify the tax issues, which issues may be ethical issues, what advice you would give the taxpayer, and measure the tax cost/savings of your advice (assume a marginal tax rate of 15%). Realize that they are looking to you for an answer, so your letter should provide an answer of what they should do with the reasoning of why and the support for your reasoning. Case 1. Chris wants help in figuring her gross income for the year. She was unemployed as the year began and collected $2,000 unemployment. She later got a job as a manager for Ark Communications, Inc. She earned $55,000 in base salary. He boss gave her a bonus check of $5,000 at Christmas. She decided to hold onto the check and not cash it so that it would not be taxable for this year. She also got fringe benefits on her job including a gym membership that costs $400 a year. She received a gold watch worth $300 for managing her department with the least accidents during the year. But her good luck did not end there. She found $5,000 in cash in the parking lot one day and kept it, of course. She also won $8,000 in a drawing at a local grocery store which sent her a 1099. But, she also won about $6,000 cash playing poker with a group of friends on Friday nights and her friends don’t issue 1099s.

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