Please see ‘case study & worksheet’ for assignment and other attachment for outline and grading requirements ad well as suggestions for resources and tax codes to use for assistance
case_study_and_worksheet.2018__1_.pdf

case_study_ouline_and_ruberic.pdf

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12/10/2018
Course Assignments – 18/FA_TAX_6670_91D Tax Accounting
ACTIVITY:
Capstone: Inventory and Uniform Capitalization (individual)
Purpose:
This exercise, Capstone: Inventory and Uniform Capitalization is tied to session 4: “Inventory and Unified Capitalization (IRC
§§471 and 263A)”. This activity is intended to serve both the faculty and the individual student’s need to assess his/her facility
with the session’s respective outcome. The exercises are designed to focus the student on his/her ability to:
succinctly state the relevant facts that create the tax accounting issue;
state the tax issue(s);
present a cogent analysis of the facts, law and principles in a well written memorandum with proper citation format;
grammar, and style.
formulate an analysis of the issue;
evaluate the precedential / usefulness of each and every one of your primary sources;
apply the circular 230 more likely than not text; and
communicate the results proper preparation of relevant tax forms
Scope of Activity:
Your previous analysis has proven quite reliable. Consequently, each of you will individually work up an analysis for another
case. The professional rendering of your concluding recommendations will determine your next assignment.
The AD has given each of you a memorandum.
Case Studies – AD: Inventory and Uniform Capitalization (IRC §§471 and 263A)
This assignment is your recommendation(s) for a selected client. Your task is to prepare an analysis according to the instructions
in the AD’s memo. Your consideration for a permanent position at Brunetti Associates depends on your thoroughness for this
assignment.
In addition to building the students’ abilities bulleted in the “Purpose” statement above, the second part of the case study will
require you to apply the rule outlined in Reg. §§1.263A-1.2. & 3, and prepare an allocation of additional §263A costs (as such is
defined in the regulations) and prepare an analysis of the additions to ending inventory with the §263A costs. You will be
required to prepare a 3115 (if necessary) and created work papers that detail your analysis and computations in the event of an
IRS audit.
Instructions:
Prior to engaging in this activity, each student should have read the assigned readings and media. Each student should have
also attended and participated in the “Forum” where the AD is available to answer questions concerning developing an Inventory
and Unified Capitalization Analysis.
To learn and apply the concepts necessary for successful completion of this exercise, students will work individually.
1. Arrange your report so that it responds to the instructions in the AD’s memo. Review the final recommendations.
2. Prepare and submit your analysis report.
Parameters:
Individuals should prepare their analysis report in WORD titled “Inventory and Unified Cap [your name]”. This report should be
double spaced using size 12 point in Times New Roman.
Any analysis can be on Excel but must be printable in 10 pt type on 8.5 x 11 paper.
Submit this document to “Course Assignments” on the upper left panel of WebCampus. Be aware that all submitted documents
are processed through SafeAssign which scans for plagiarism. You will only have one attempt to submit the final, therefore be
certain you have reviewed it thoroughly before doing so.
Evaluation and Grading:
Determining Inventory
Excellent =16
– 13
Above
Average = 12 – 9
Satisfactory =8 – 5
Unsatisfactory = 4
-1
None = 0
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1
Determine
Cost of
Goods Sold
(CDGS)
Course Assignments – 18/FA_TAX_6670_91D Tax Accounting
Identifies items
need to be
taken into
consideration
when
computing
COGS and
properly
accounts for
Pilferage,
Casualty,
Physical
shrinkage,
Damages,
Subnormal
goods, Good
Identifies items
need to be taken
into consideration
when computing
COGS but does
not account for
Pilferage,
Casualty, Physical
shrinkage,
Damages,
Subnormal
goods, Good out
Identifies
most items need to
be taken into
consideration when
computing COGS
Identifies
some items need to
be taken into
consideration when
computing COGS
Fails to identify items
need to be taken into
consideration when
computing COGS
of style, or Goods
used for
advertisement
out of style, or
Goods used
for
advertisement
2
Cost Flow
Assumptions
/ Methods
3
Valuation
4
Inventoriable
and noninventoriable
Items
5
Determining
Whether to
expense or
capitalize a
Materials or
Supply
Has identified
costs flow
assumptions
or methods
and has
properly
applied them
Has identified
costs flow
assumptions or
methods but has
properly applied
them
Has identified most
costs some cost
flow assumptions
or methods
Has identified some
cost flow
assumptions or
methods
Has failed to identify
cost flow assumptions
or methods
Has identified
valuation
methods and
has
determined all
of the costs of
individual
basis of items
on which
valuation is
determined
Has identified
valuation methods
and has
determined most
of the costs of
individual basis of
items on which
valuation is
determined
Has identified
valuation methods
and has
determined some
of the costs of
individual basis of
items on which
valuation is
determined
Has identified
valuation methods
but has not the
individual basis of
items on which
valuation is
determined
Has failed to identify
valuation methods
Has
differentiated
most
Inventoriable
and noninventoriable
Items but has
not explained
the differences
between
specific items
such as
containers,
spare parts,
rotable parts,
etc
Has differentiated
most Inventoriable
and noninventoriable Items
but has not
explained the
differences
between specific
items such as
containers, spare
parts, rotable
parts, etc.
Has differentiated
most Inventoriable
and noninventoriable Items
Has differentiated
some Inventoriable
and noninventoriable Items
Has failed to make
any distinction
between Inventoriable
and non-inventoriable
Items
Has given
proper
authority (i.e.
regulation,
Rev. Proc.,
etc) for
determining
whether to
expense or
Has given
significant
authority for
determining
whether to
expense or
capitalize a
materials or supply
and had provided
Has generally
identified the
authority for
determining
whether to expense
or capitalize a
materials or supply
and had provided a
Has generally
identified the
authority for
determining
whether to expense
or capitalize a
materials or supply
Has failed to identify
the authority for
determining whether
to expense or
capitalize a materials
or supply
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6
Need for
Inventories
Course Assignments – 18/FA_TAX_6670_91D Tax Accounting
capitalize a
materials or
supply and
had provided a
rational basis
for the position
taken
a rational basis for
the position taken
rational basis for
the position taken
Has identified
regulation and
cases as
authority for
determining
when
inventories
must be
maintained
and correctly
provided
supporting
explanation of
such authority
Has identified
regulation and
cases as authority
for determining
when inventories
must be
maintained and
provided
supporting
explanation of
such authority
Has identified
regulation and
cases as authority
for determining
when inventories
must be maintained
Has identified
regulation as
authority for
determining when
inventories must be
maintained
Has failed identify the
authority for
determining when
inventories must be
maintained
Principal Issues Arising Under the UNICAP Rules
Excellent = 16 – 13
Above Average
=12 – 9
Satisfactory = 8 5
Unsatisfactory = 4 1
None = 0
Identifies
appropriate
UNICAP rule
associated with
the property in
question but
does not clearly
identify the
which properties
are not subject
to UNICAP
Identifies most of
the appropriate
UNICAP rule
associated with the
property in
question
Identifies some of
the appropriate
UNICAP rule
associated with the
property in question
Fails to identify
the appropriate
UNICAP rule
associated with
the property in
question
Identifies a
majority of
exceptions to
UNICAP
Identifies most of
exceptions to
UNICAP
Identifies some of
exceptions to
UNICAP
Fails to Identify
any exceptions
to UNICAP
Has identified costs
subject to UNICAP
and has
differentiated cost
not subject to
UNICAP
Has identified
most costs
subject to
UNICAP and has
generally
differentiated
cost not subject
to UNICAP
Has identified
most costs subject
to UNICAP but
has failed
differentiated cost
not subject to
UNICAP
Has generally
identified costs
subject to UNICAP
and has failed
differentiated cost
not subject to
UNICAP
Has failed to
identified costs
subject to
UNICAP and
has failed
differentiated
cost not
subject to
UNICAP
Has determined
what costs are
subject to the
application of the
mixed service cost
rules but has not
identified the
proper allocation
formula
Has determined
what costs are
subject to the
application of the
mixed service
cost rules but
has not identified
the proper
Has mostly
determined what
costs are subject
to the application
of the mixed
service cost rules
but has not
identified the
Has generally
determined what
costs are subject to
the application of the
mixed service cost
rules but has not
identified the proper
allocation formula
Has failed to
determine what
costs are
subject to the
application of
the mixed
service cost
rules
1
Determine
whether
UNICAP
rules are
applicable to
property in
question
Correctly identifies
the appropriate
UNICAP rule with
the
property and clearly
identify the which
properties are not
subject to UNICAP
2
Has
identified
exceptions
to UNICAP
3
Determine
costs
subject to
capitalization
under
UNICAP
4
Determine
and allocate
mixed
service costs
between
production,
reseale, and
Correctly identified
in detail all thirteen
exceptions to
UNICAP
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12/10/2018
Course Assignments – 18/FA_TAX_6670_91D Tax Accounting
other
activities
5
Allocate
capitalized
costs to
section 263A
property
6
Has
identified a
simplified
method to
utilize for
sellers or
producers to
determine
cost to be
added to
ending
inventory
allocation
formula
proper allocation
formula
Has identified the
proper simplified
method or actual
method to allocate
capitalizable costs
to section 263A
property and
utilized the method
properly
Has identified
the proper
simplified
method or actual
method to
allocate
capitalizable
costs to section
263A property
but has not
stated the
method properly
Has generally
identified the
proper simplified
method or actual
method to allocate
capitalizable costs
to section 263A
property but has
not stated the
method properly
Has failed to identify
the proper simplified
method or actual
method to allocate
capitalizable costs to
section 263A
property
Has failed to
identify the
proper
simplified
method or
actual method
to allocate
capitalizable
costs to
section 263A
property
Has identified a
simplified method
to utilize for sellers
or producers has
applied the method
and has reached a
correct result and
correctly
determined ending
inventory
Has identified a
simplified
method to utilize
for sellers or
producers has
applied the
method but has
reached an
incorrect ending
inventory
Has identified a
simplified method
to utilize for sellers
or producers but
has not applied the
method correctly
Has misidentified a
simplified method to
utilize for sellers or
producers
Has failed
identify a
simplified
method to
utilize for
sellers or
producers
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