In this essay, the two tax memos discussing the same issues are evaluated. The essay also aims to provide suggestions for improving the tax memos. The tax memo discusses matters related to Bountiful Snow Inc. There are particularly four issues that have been discussed in the memo.
The first issue that has been discussed in the memo is whether the land improvement is a deprecating asset and for what period the land is depreciated. The memo provides conclusion that the land is not a depreciating asset so no depreciation is charged for the land improvement. The reasoning of authority given in support of the above conclusion states that as per 26CFR 1.167(a)-2 the depreciation is allowed on depreciable that are subject to wear and tear (Saez & Zucman, 2016). The Rule 65-265 provides that general grading of land is considered as capital expenditure but they are not depreciated. The federal service advice memorandum discusses matter related to the ski resort and it states that the cost related to resort mountain, roads and slope are not subject to depreciation (Mertens & Ravn, 2013). The conclusions of both the tax memos are different. In another tax memo, it is provided that the land should be considered as depreciating assets. Therefore, in both the memos the conclusions provided are not similar.
The second issue that has been discussed in the memo is whether the ski equipment and modular training is regarded as the MCARS assets class 80. The conclusion provided in the tax memo states that the ski equipment should be included in the asset class 80 with having an assets life cycle of 12.5 years and the recovery period of 7 years. The other tax memo doses not provide detailed discussion about the issue. However, in discussion the issue of depreciation it is provided that the asset is MACRS 80 (Chetty et al., 2016).
The third issue that is discussed in the tax memo relates to determination whether the modular building that has been used for personal purpose fulfills the requirement of business purpose. The conclusion relating to the tax memo provides that the assets are regarded as put to use for the purpose of business when they are intended to be used for the business. The other tax memo provides that the assets are considered to be put to used if they are intended to be used in the business (Reynolds & Smolensky, 2013).
The purposes of the tax memos are to provide suggestion relating to the issues that are discussed in the memo. On evaluating both the tax memo it can be seen that the information provided are organized. However, it is suggested that the memo discusses the issue in more details.
Chetty, R., Stepner, M., Abraham, S., Lin, S., Scuderi, B., Turner, N., ... & Cutler, D. (2016). The association between income and life expectancy in the United States, 2001-2014. Jama, 315(16), 1750-1766.
Mertens, K., & Ravn, M. O. (2013). The dynamic effects of personal and corporate income tax changes in the United States. The American Economic Review, 103(4), 1212-1247.
Reynolds, M., & Smolensky, E. (2013). Public expenditures, taxes, and the distribution of income: The United States, 1950, 1961, 1970. Academic Press.
Saez, E., & Zucman, G. (2016). Wealth inequality in the United States since 1913: Evidence from capitalized income tax data. The Quarterly Journal of Economics, 131(2), 519-578.