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ACCT 230 ACCT230 ACCT/230 Week 3 Research Project.docx – Tax Research Memorandum
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ACCT 230 ACCT230 ACCT/230 Week 3 Research Project.docx – Tax Research Memorandum
Tax Research Memorandum
Date: September 10, 2019
To: Jacob the Nutritionist
From:
Subject:Accounting Methods
Summary of Facts:
Jacob is a nutritionist who is in the process of setting up a large group practice.He expects that the group will have gross receipts of $20,000,000 in the first year and grow by 4% each year.
Description
ACCT 230 ACCT230 ACCT/230 Week 3 Research Project.docx – Tax Research Memorandum
Tax Research Memorandum
Date: September 10, 2019
To: Jacob the Nutritionist
From:
Subject:Accounting Methods
Summary of Facts:
Jacob is a nutritionist who is in the process of setting up a large group practice.He expects that the group will have gross receipts of $20,000,000 in the first year and grow by 4% each year.
In addition to providing nutritional counseling services the group will sell vitamins, DVDs, and small exercise equipmentsuch as hand weights and mats for stretching. The revenues for these products is expected to be about 5% of the total revenue earned each year.
Issue:
What is the allowable tax accounting method for Jacob’s new practice?
Law & Analysis:
I.R.C. 26 U.S. Code§ 448 allows a corporation whose average gross receipts for a 3-taxable-yearperiod that does not exceed $25 million the option of using the cash receipts and disbursements method. As you are just setting up your practice this rule will also apply to your company as well.
