Compare the tax advantages of debt versus equity capital

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Reference no: EM131353337

Assignment: Client Letter

Imagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on the most advantageous capital structure of a new corporation. Your client formed the corporation in question to provide technology to the medical profession to facilitate compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your client is very excited because of the ability to secure several significant contracts with sufficient capital.

Use the Internet and Strayer databases to research the advantages and disadvantages of debt for capital formation versus equity for capital formation of a corporation. Prepare a formal letter to the client using the six step tax research process and demonstrated in Appendix A of your textbook as a guide.

Write a one to two page letter in which you:

1.Compare the tax advantages of debt versus equity capital formation of the corporation for the client.

2.Recommend to the client whether he / she should use debt or equity for capital formation of the new corporation, based on your research.

Provide a rationale for the response.

Your assignment must follow these formatting requirements:

•Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

•Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

STEPS IN THE TAX RESEARCH PROCESS

1.Determine the facts
2.Identify the issues (questions).
3.Locate the applicable authorities
4.Evaluate the authorities and choose those to follow where the authorities conflict.
5.Analyze the facts in the terms of the applicable authorities.
6.Communicate conclusions and recommendations to the client.

Reference no: EM131353337

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