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Essay Available:
Pages:
2 pages/β‰ˆ550 words
Sources:
No Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Coursework
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 12.64
Topic:

Tax Consequences to Jelly Roll for Reimbursements to Investors

Coursework Instructions:

Case Information:
Different scenarios will be assigned to individual students before this activity is due. You are not allowed to work with other students on this as I am assessing what you have learned and how well you can apply it to a real world setting. You will submit it here as a word document as an attachment. See details below.
Requirements:
1. Prepare a tax file memo (no more than 4 pages excluding the cover page) to discuss the following.
------------ Jelly Roll is a famous county and western singer. As an investment, he started a chain of chicken restaurants. Jelly's friends and associates invested $1,200,000 in the venture. The restaurants failed and the investors lost all their money. Because of his visibility and stature as a famous singer in the entertainment industry and to save his reputations and image, Mr. Roll felt personally responsible for the losses so he reimbursed all the investors for the $1,200,000 loss. What are the tax consequences to Jelly for the reimbursements? -------------
2. Your file memo should include the following elements.
Identify the facts and tax issue(s).
Locate the APPLICABLE Internal Revenue Code Section(s), and if applicable and at a minimum at least 1 Regulation, 1 Administrative Ruling and 2 Court Cases along with other applicable primary authority to support your research, cite the primary sources properly. Please note that more is not necessarily better. Select the most relevant and up to date primary sources.
3. Analyze the situation and reach your conclusion.
4. In addition, briefly describe how you found your primary sources, e.g. what keywords you used in searching, what documents/places you have reviewed that lead to the primary sources.
5. Prepare your tax file memo in a Word document (your choice form the formats)Preview the document and submit in Canvas.

Coursework Sample Content Preview:
Legal MEMORANDUM
From: ____________
Subject: Tax Consequences to Jelly Roll for Reimbursements to Investors
FACTS
Jelly Roll, a famous county and western singer, started a chain of chicken restaurants as an investment. His friends and associates invested $1,200,000 in the venture. Unfortunately, the restaurants failed and the investors lost all their money. To save his reputation and image, Mr. Roll felt personally responsible for the losses and reimbursed all the investors for the $1,200,000 loss.
ISSUE
The primary issue in this case is the tax consequences to Jelly Roll for the reimbursements to the investors.
APPLICABLE LAW AND ANALYSIS
Section 165 of the Internal Revenue Code (IRC) allows taxpayers to deduct losses sustained during the taxable year, subject to certain limitations. However, the IRC does not provide specific guidance on the tax treatment of reimbursements made by a taxpayer for losses incurred by others.
Revenue Ruling 67-262 provides guidance on the tax treatment of reimbursements made by a taxpayer for losses incurred by others. The ruling states that if a taxpayer reimburses another person for a loss, the taxpayer is not entitled to a deduction for the reimbursement. The reimbursement is treated as a gift, and the recipient of the reimbursement is not required to include the amount in gross income.
In Commissioner v. Duberstein, 363 U.S. 278 (1960), the Supreme Court held that for a payment to be a gift, it must be made with detached and disinterested generosity, out of affection, respect, admiration, charity, or like impulses. If the payment is made with an expectation of a benefit in return, it is not a gift and is taxable income.
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