You are a tax advisor and your client, Nora, owns and operates C-C Bakery (a C-Corp for tax purposes). She encounters three different tax scenarios on which she requests your advice. You are to research the relevant tax code and make recommendations to her in the form of a memorandum for each situation.
Nora has some further questions for you regarding her individual tax return and C-C Bakery. Her business has been doing extremely well, and she has decided to give back to her community. She would like to contribute $70,000 in December of this year to the charitable and nonprofit Boys and Girls Club. She would like to know if she should contribute this from her business account (C-Corp) or her individual account (1040 return). She would also like to know if there are any tax advantages or limitations. Her bakery has been profitable, as her taxable income is projected to be around $500,000 on this year’s tax return. Her adjusted gross income on her individual return will be around $350,000. She has made no further charitable contributions throughout the year. In a short memo, advise how she can take advantage of the deduction for the charitable contributions to her community via her individual return and/or corporate return. Be specific regarding code sections or any other primary or secondary sources. You will find a memo template in Chapter 10 of the Federal Tax Research textbook.
Specifically, the following critical elements must be addressed:
Charitable Giving
Identify sources for evaluating appropriate tax situation
Document research performed to determine if charitable giving applies to tax year and specific limitations, describing results
Apply research to individual or business tax years and determine amount of deduction
Document findings and advice in a memorandum to the client, including supporting details
