Writing Assignment 5Answer the tax question(s) listed in each of the following hypothetical cases. Where applicable, your analysis should be organized into the following sections: Facts, Tax Issues, Tax Sources, Tax Analysis, and Conclusion.Research Problem 1Joe L. Laser is a promising left-handed pitcher for the SIU baseball team. He has been drafted by the Chicago Cubs. I n 2018, he is offered two separate contracts by the Cubs. The first contract provides that he will be paid $1,000,000 as a bonus in 2018. The second provides that the Cubs will transfer $1,000,000 into a bank account in his name for withdrawal no earlier than 2020. He will also be paid the market rate of interest upon payment of the $1,000,000 in 2020. Laser accepts the second contract. Is the $1,000,000 payable to Laser in 2020 taxable to Loser and, if so, in what year? Write a memo to the tax files supporting your conclusion. Research Problem 2Everly Cansada has been charged with failure to file her 2017 federal Form 1040. As such, she has come to your office to seek your assistance. She wants to file her 2017 Form 1040 but believes the “reasonable cause” exception should apply. She was under a great deal of stress at work and her in personal life during the 2018 filing season. As a result, Everly developed a sleep disorder which was treated with a combination of pills and counseling.You prepare Everly’s 2017 Form 1040. She agrees to pay the tax and related interest but insists the failure-to-pay penalty does not apply as she will ill. She feels she should not be expected to meet the usual deadline for filing since she was ill. Please write a letter to Everly explaining whether she will be required to pay the failure-to-pay penalties or whether she meets the criteria to be exempted from the penalty. In a separate document provide the authority supporting your conclusion and explaining how you reached such conclusion. This does not need to be a tax memo in proper form. Research Problem 3Joy Joysen resides in Walla Walla, Washington. In 2014, Washington State law was amended to allow the legal selling of marijuana. Marijuana is classified as an illicit narcotic under federal law. In 2017, Joysen operated the House of Joy as a sole proprietorship which sold marijuana.The House of Joy also operated a Joy Room which promised that marijuana consumed therein would alleviate all medical woes. Gross sales were $100,000. Operating expenses other than cost of goods sold were $78,000. Cost of goods sold were $10,000. Assuming that Joysen is in a 28% tax bracket, what is her tax liability as a result of this business? Please write a letter to Joy explaining how to calculate her taxable income and tax liability. Write a memo to the tax files supporting your conclusion.
