AC553 You Decide Week 4
BEM Tax Services
Memo
To: John and Jane Smith
From: Benedict Mitchell
Date: [ 10/7/2011 ]
Re: Tax Issues
Upon reviewing the information you submitted to me concerning your taxes, they were several issues which I observed.
First I will like to discuss John’s issues:
* The $300,000 will have to be treated as ordinary employment income, subject to federal and state income taxes.
* The $25,000 will have to be treated as an expense.
* I have determined that you have to account for all qualified business expenses and only net income will be taxable.
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