To begin your discussion, explain how transactions qualify asbusiness expense deductions and provide examples. Based upon yourknowledge of deductible business expenses and through research,address the following scenario as Mr. Gerbeuses tax advisor:
Mr. Bouteilles Gerbeuses has been your long-time tax client. Hehas amassed an impressive portfolio of real estate, securities, andjoint venture investments. His net worth is substantial. Despiteall his material well-being, Mr. Gerbeuses wants to take on a newchallenge, that of producing fine wines.
He already owns several hundred acres of agriculturally zonedland in the wine producing region of the Noir Valley. It happens toadjoin his home in the Wemadeit Country Club and Retirement Resortsubdivision. He expects his start-up capital investment to be over$5 million and does not expect the first harvest to take place forat least seven years after the initial planting of grape vines. Heexpects to offset any losses by his other income.
Assuming Mr. Gerbeuses comes to you for tax advice on his newwine venture, what tax advice will you provide, and what, if any,ethical issues should be considered? As you work to identifyethical concerns and applicable areas of taxation that Mr.Gerbeuses may require guidance and counsel in, consider thefollowing ideas:
How will his entity choice impact both protection of assets andpersonal tax obligation?
What are the tax implications associated with employing familymembers (assuming he has other family members living and working onhis large estate)?
What types of deductions/expenses might Mr. Gerbeuses be rightlyentitled to; what types of deductions/expenses may provideopportunity for abuse?
Does placement of this personal property into business usepresent any tax benefits or consequences for the propertyowner?
To begin your discussion, explain how transactions qualify asbusiness expense deductions and provide examples. Based upon yourknowledge of deductible business expenses and through research,address the following scenario as Mr. Gerbeuses tax advisor:
Mr. Bouteilles Gerbeuses has been your long-time tax client. Hehas amassed an impressive portfolio of real estate, securities, andjoint venture investments. His net worth is substantial. Despiteall his material well-being, Mr. Gerbeuses wants to take on a newchallenge, that of producing fine wines.
He already owns several hundred acres of agriculturally zonedland in the wine producing region of the Noir Valley. It happens toadjoin his home in the Wemadeit Country Club and Retirement Resortsubdivision. He expects his start-up capital investment to be over$5 million and does not expect the first harvest to take place forat least seven years after the initial planting of grape vines. Heexpects to offset any losses by his other income.
Assuming Mr. Gerbeuses comes to you for tax advice on his newwine venture, what tax advice will you provide, and what, if any,ethical issues should be considered? As you work to identifyethical concerns and applicable areas of taxation that Mr.Gerbeuses may require guidance and counsel in, consider thefollowing ideas:
How will his entity choice impact both protection of assets andpersonal tax obligation?
What are the tax implications associated with employing familymembers (assuming he has other family members living and working onhis large estate)?
What types of deductions/expenses might Mr. Gerbeuses be rightlyentitled to; what types of deductions/expenses may provideopportunity for abuse?
Does placement of this personal property into business usepresent any tax benefits or consequences for the propertyowner?
