POST ACC525 Unit 4 Discussion Latest 2019 July Question # 00602758 Course Code : ACC525 Subject: Business Due on: 07/05/2019 Posted On: 07/05/2019 12:29 PM Tutorials: 1 Rating: 4.6/5
ACC525 Advanced Topics in Taxes
Unit 4 Discussion
Using the
text, the readings and other exercises, as well as any additional research
done, discuss here what some of your learnings and insights are regarding the
revenue and expenditure issues. Also share what you think some of the
challenges might be when it comes to these issues/topics.
Explain the
difference between a realized gain and a recognized gain. How is the amount realized on a sale or
exchange determined? Provide an example.
Juan owns
40% and Mario owns 60% of Crispy Donuts, Inc. (CDI). Juan wants to buy out Mario’s interest in
CDI, so he arranges a stock sale agreement under which CDI will redeem
(purchase) all of Mario’s shares for $900,000.
This will then make Juan the sole shareholder of CDI. Juan wants to ensure that Mario does not open
a competing donut business nearby so he also has a covenant-not-to-compete
drawn up at the same time as the stock sale agreement.
Under the
terms of the covenant-not-to-compete, Mario cannot open another donut business
within a 10 mile radius for a period of five years. During this 60 month period, CDI will pay
Mario $9,000 per month in return for his agreement not to compete. CDI wants to know over what time period it
should amortize the covenant-not-to-compete.
Consider
any ethical issues that may arise. Cite
proper IRS regulation(s) to support your point of view. Review rubric for discussion requirements.
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