NOTE

Complete the problems as presented in this document. You may create a new document and/or spreadsheet as needed. Any memo should be no more than 3 pages in length. Please state any assumptions used if problems are not clear.

 

 

Problem 1

Your client, a physician, recently purchased a yacht on which he flies a pennant with a medical emblem on it. He recently informed you that he purchased the yacht and flies the pennant to advertise his occupation and thus attract new patients. He has asked you if he may deduct as ordinary and necessary business expenses the costs of insuring and maintaining the yacht. In search of an answer, consult RIA’s CHECKPOINT TAX available on-line through the SNHU Shapiro Library. Explain the steps taken to find your answer.

 

Problem 2 

Stacey Small has a small salon that she has run for a few years as a sole proprietorship. The proprietorship uses the cash method of accounting and the calendar year as its tax year. Stacey needs additional capital for expansion and knows two people who might be interested in investing. One would like to practice hairdressing in the salon. The other would only invest.

Stacey wants to know the tax consequences of incorporating the business. Her business assets include a building, equipment, accounts receivable and cash. Liabilities include a mortgage on the building and a few accounts payable, which are deductible when paid.

 

Write a memo to Stacey explaining the tax consequences of the incorporation. As part of your memo examine the possibility of having the corporation issue common and preferred stock and debt for the shareholders’ property and money.

 

Problem 3

Five years ago, Lacey, Kaylee, and Doug organized a software corporation, DLK, which develops and sells Online Meetings software for businesses.  DLK is a C corporation. Each individual contributed $10,000 to the company in exchange for 1,000 shares of DLK stock (for a total of 3,000 shares). The corporation also borrowed $250,000 from ACME Venture Capital to finance operating costs and capital expenditures.

 

Because of intense competition, DLK struggled for the first few years of operation and the corporation sustained chronic losses. This year, Lacey, DLK’s president, decided to seek additional funds to finance DLK’s working capital.

 

CME declined to extend additional funds because of the money already invested in DLK. High Tech Venture Capital Inc. proposed to lend DLK $100,000, but at a 10% premium over the prime rate. (Other software manufacturers in the same market can borrow at a 3% premium.) First Round Capital proposed to invest $50,000 of equity capital into DLK, but on the condition that the investment firm be granted the right to elect five members to DLK’s board of directors. Discouraged by the “high cost” of external borrowing, Lacey decides to approach Kaylee and Doug.

 

Lacey suggests to Kaylee and Doug that each of the three original investors contribute an additional $25,000 to DLK in exchange for five 20-year debentures. The debentures will be unsecured and subordinate to ACME’s debt. Annual interest on the debentures will accrue at a floating 5% premium over the prime rate. The right to receive interest payments will be cumulative; that is each debenture holder is entitled to past and current interest payments before DLK’s board can declare a common stock dividend. The debentures would be both nontransferable and noncallable. Lacey, Kaylee and Doug have asked you, their tax accountant, to advise them on the tax implications of the proposed financing agreement. After researching the issue, issue your advice in a tax research memo. At a minimum, you should consult the following authorities:

• IRC. Sec 385
• Rudolph A. Hardman, 60 AFTR 2d 87-5651, 82-7 USTC ¶9523 (9^th Cir., 1987)
• Tomlinson v. The 1661 Corporation, 19 AFTR 2d 1413, 67-1 USTC ¶9438 (5^th Cir., 1967)

 

 

Problem 4

Which of the following groups constitute a controlled group? (Any stock not listed below is held by unrelated individuals each owning less than 1% of the outstanding stock.) For brother-sister corporations, which definition applies?

1. Mark owns 90% of the single classes of stock of Hot and Ice Corporations.
2. Johnson and Carey Corporations each have only a single class of stock outstanding. The two controlling individual shareholders own the stock as follows:

1. Red, Blue and ABC Corporations each have a single class of stock outstanding. The stock is owned as follows:

 

Red Corporation’s stock is widely held by over 1,000 shareholders, none of whom owns directly or indirectly more than 1% of Red’s stock.

1. Helm, Oak, Walnut and Zinnia Corporations each have a single class of stock outstanding. The stock is owned as follows:

 

 

 

Problem 5

Eric and Denise are partners in ED Partnership. Eric owns a 60% capital, profits and loss interest. Denise owns the remaining interest. Both materially participate in the partnership activities. At the beginning of the current year, ED’s only liabilities are $50,000 in accounts payable, which remain outstanding at year-end. In August, ED borrowed $120,000 on a nonrecourse basis from Delta Bank. The loan is secured by property with a $230,000 FMV. These are ED’s only liabilities at year-end. Basis for the partnership interest at the beginning of the year is $40,000 for Denise and $60,000 for Eric before considering the impact of liabilities and operations. ED has a $200,000 ordinary loss during the current year. How much loss can Eric and Denise recognize?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 6

Linda pays $100,000 cash for Jerry’s ¼ interest in the JILL Partnership. The partnership has a Sec. 754 election effect. Just before the sale of Jerry’s interest, JILL’s balance sheet appears as follows:

		Partnership’s Basis		FMV
Assets:
Cash		$75,000		$75,000
Land		$225,000		$325,000
Total		$300,000		$400,000
Partners’ capital
Jerry		$75,000		$100,000
Instrument Corp		$75,000		$100,000
Logo Corp		$75,000		$100,000
Lighthouse Corp		$75,000		$100,000
Total		$300,000		$400,000

 

1. What is Linda’s total optional basis adjustment?
2. If JILL Partnership sells the land for its $325,000 FMV immediately after Linda purchases her interest, how much gain or loss will the partnership recognize?
3. How much gain will Linda report as a result of the sale?

 

Problem 7

Monte and Allie each own 50% of Raider Corporation, an S corporation. Both individuals actively participate in Raider’s business. On January 1, Monte and Allie have adjusted bases for their Raider stock of $80,000 and $90,000 respectively. During the current year, Raider reports the following results:

Ordinary loss		$175,000
Tax-exempt interest income		20,000
Long-term capital loss		32,000

Raider’s balance sheet at year-end shows the following liabilities: accounts payable, $90,000; mortgage payable, $30,000; and note payable to Allie, $10,000.

1. What income and deductions will Monte and Allie report from Raider’s current year activities?
2. What is Monte’s stock basis on December 31?
3. What are Allie’s stock basis and debt basis on December 31?
4. What loss carryovers are available for Monte and Allie?
5. Explain how the use of the losses in Part a would change if instead Raider were a partnership and Monte and Allie were partners who shared profits, losses and liabilities equally.

 

Problem 8

Tom Hughes died in 2009 with a gross estate of $3.9 million and debt of $30,000. He made post-1976 taxable gifts of $100,000, valued at $80,000 when he died. His estate paid state death taxes of $110,200. What is his estate tax base?

 

 

 

1. When a consumer expresses thoughts, feelings, images, experiences, and beliefs associated with

 the brand, the consumer is expressing ________.

a. self-serving bias

b. ethnocentric bias

c. cognitive dissonance

d. brand knowledge

e. brand identity

2. A consumer who expresses rational and emotional attachments to the brand to the exclusion of

 most other brands has reached the ________ level in the brand dynamics pyramid.

a. presence

b. performance

c. bonding

d. relevance

e. advantage

3. According to the BRANDZ model of brand strength, brand building involves people progressing

 through a sequential series of steps. Which of these steps convey the message “Nothing else

 beats this brand”?

a. relevance

b. bonding

c. presence

d. performance

e. advantage

4. Brand salience ________.

a. describes the relationship customers have with the brand and the extent to which they

 feel they’re “in sync” with it

b. is how well the product or service meets customers’ functional needs

c. describes the extrinsic properties of the product or service, including the ways in which

 the brand attempts to meet customers’ psychological or social needs

d. is how often and how easily customers think of the brand under various purchase or

 consumption situations

e. is customers’ emotional responses and reactions with respect to the brand

5. Mark feels that Shell delivers on its promises to supply the best gasoline possible to the public.

 His experiences with Shell have always been good, resulting in positive brand contact. Mark is

 most likely experiencing brand ________.

a. parity

b. harmonization

c. alliance

d. bonding

e. essence

6. Which of the following value creation processes means sharing the brand’s “good news” and

 inspiring others to use the brand?

a. staking

b. evangelizing

c. badging

d. milestoning

e. justifying

7. Which of the following value creation processes means detailing the brand relationship journey

 in a narrative way, often anchored by and peppered with milestones?

a. badging

b. milestoning

c. evangelizing

d. documenting

e. staking

8. The introduction of diet coke by the Coca Cola Company is an example of ________.

a. brand harmonization

b. co-branding

c. category extension

d. brand dilution

e. line extension

9. A major advantage of a ________ strategy is that the company does not tie its reputation to the

 product.

a. separate family brand name

b. blanket family name

c. category extension

d. licensing

e. brand revitalization

10. A ________ is a set of all brand lines that a particular seller makes.

a. brand image

b. brand extension

c. brand platform

d. cobrand

e. brand mix

11. Two advantages of ________ are that they can facilitate new-product acceptance and provide

 positive feedback to the parent brand and company.

a. brand dilutions

b. brand audits

c. product licensing

d. brand architecture

e. brand extensions

12. ________ are defined as companies that satisfy the same customer need.

a. Industries

b. Task groups

c. Trendsetters

d. Communities

e. Competitors

13. ________ are product associations that are not necessarily unique to the brand but may in fact

 be shared with other brands.

a. Points-of-divergence

b. Points-of-presence

c. Points-of-difference

d. Points-of-inflection

e. Points-of-parity

14. Philip Morris bought Miller brewing and launched low-calorie beer at a time when consumers

 had the impression that low-calorie beer does not taste as good as normal beer. What did the

 company try to build when they conveyed the fact that the beer contained one third less

 calories and hence it is less filling?

a. points-of-presence

b. points-of-conflict

c. points-of-inflection

d. points-of-difference

e. points-of-parity

15. American Express’, “Worldclass Service, Personal Recognition,” Mary Kay’s, “Enriching

 women’s lives,” Hallmark’s, “Caring Shared,” and Starbucks’, ”Rewarding Everyday Moments”

 are examples of brand ________.

a. mantras

b. parity

c. architecture

d. extension

e. identity

16. A brand ________ is a translation of the brand mantra that attempts to creatively engage

 consumers and others external to the company.

a. vision

b. extension

c. alliance

d. architecture

e. slogan

17. When the total market expands, the dominant ________ usually gains the most.

a. challenger

b. nicher

c. firm

d. follower

e. entrant

18. As the marketing manager of a company that manufactures floor tiles, Evans Smith is given a

 target to achieve 500 new customers by the end of summer. He decides to search the market

 for probable customers who might use the product but do not at present. Which of the

 following strategies is Evans pursuing to increase the market demand for his product?

a. new-market segment strategy

b. market-penetration strategy

c. geographical-expansion strategy

d. consolidation strategy

e. needs-assessment strategy

19. A(n) ________ strategy is another name for identifying shifts in market segments that are

 causing gaps to develop, then rushing in to fill the gaps and developing them into strong

 segments.

a. encircling

b. flanking

c. bypass

d. counteroffensive

e. frontal attack

20. As a market follower, the ________ may choose to sell to different markets, but often it grows

 into a future challenger.

a. imitator

b. counterfeiter

c. innovator

d. cloner

e. adapter

21. A dance school in the Bronx teaches professional hip-hop and salsa. It is experiencing an

 increase in student admissions, which is leading to substantial improvement in profits. The

 school is going through the ________ phase of its life cycle.

a. decline

b. introduction

c. maturity

d. growth

e. stagnancy

22. According to Peter Golder and Gerald Tellis, a(n) ________ is the first to develop a working

 model of the product.

a. developer

b. creative pioneer

c. inventor

d. product pioneer

e. market pioneer

23. What goods are similar in quality but different enough in price to justify shopping

 comparisons?

a. heterogeneous shopping goods

b. homogeneous shopping goods

c. emergency goods

d. convenience goods

e. specialty goods

24. Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the

 core brand’s quality image.

a. out-market

b. down-market

c. two ways

d. one way

e. up-market

25. If line filling is overdone, it could result in ________ and customer confusion.

a. self-cannibalization

b. disintermediation

c. manufacturing inefficiencies

d. sales paralysis

e. ineffective management

 

Purpose of Assignment 

This assignment is designed to help students analyze and understand how price setting and go to market (distribution) are interrelated and affects the profitability and growth of the business. It has been designed to be a short overview on purpose: the concepts of pricing and distribution are complex and a general understanding is what should be absorbed in one week of study. 

Assignment Steps 

Resources: Marketing Plan and Outline

Construct a minimum 700-word plan for setting price and a distribution model (place/distribution) in Microsoft® Word. This plan should address at least three elements (from the Price and Place/Distribution list below) of the Price and Place/Distribution section of the marketing plan.

• Price and Place/Distribution:
• Distribution Strategies
• Channels, Mass, Selective, Exclusive
• Positioning within channels
• Dynamic/Static Pricing Strategies
• Channel tactics (Pricing)
• Daily pricing, promotion pricing, List pricing

Note: Please complete assignment on Phillip Morris tobacco company

The plan will be a continuation of your global or multi-regional business you chose in Week 1. This will be incorporated into your overall marketing plan for Week 6.

Be prepared to discuss in class!

Format your assignment according to APA guidelines.

Submit your assignment.

 After reviewing the Research Paper assignment, you should begin exploring the direction of your research and writing.  A 400-450 word topic proposal should be submitted.  The topic proposal should follow APA stylistic guidelines and include:

Proposed topic (1 sentence)
Why the topic is interesting and important, including a citation from at least one scholarly journal article (2-3 paragraphs)
Thesis statement (1 sentence) 

Suggested Topics for Organizational Communication Papers

Leadership (focused on a specific area, if possible)

Conflict Management

Crisis Management

Sexual Harassment

Sustainability

Social Media

Decision Making

Organizational Change

Diverse Workplace

Great Place to Work/Human Resources

Ethics/Integrity

Equal Pay/Equal Work

Fair Trade (not Free Trade)

Quality/Safety Performance

Organizational Culture

Organizational Climate

Gender Equity

Power

Group/Team Building

Group/Team Remote Communication Strategies