ACC memo

ACC 331 - Fall 2018

Writing Assignment

John Tutor, a senior manager at the CPA firm where you are employed, forwarded you an e-mail

from a client (MTL Corporation, a calendar-year c-corporation). The senior manager asks you to

write a one page memo to Wendy Noble, the CPA firm’s partner on the account, explaining the

relevant tax issues and providing advice to the client. The senior manager request that you

submit the memo by Thursday, November 1, 2018, before the end of the business day (5:00pm).

Here is the e-mail from the client:

(sent on December 23, 2017)

Dear Wendy:

The signing of the Tax Cut and Jobs Act on December 22, 2017 has substantially lowered the

corporate income tax rate for MTL Corporation from 35% to 21%. We would like to take

advantage of any potential tax savings and are soliciting your tax advice on the sale of an

investment property.

We are planning to sell a plot of land we acquired in 2004 at a cost of $340,000. The land was

originally acquired for investment purposes and we don’t expect any further appreciation in

value. We have identified a buyer who is willing to purchase the land at its fair market value of

$600,000. The sales proceeds are needed to finance expansion of our operations in the second

quarter of 2018. We plan to close the deal on December 28, 2017 but our CEO has suggested

delaying the sale until after January 1, 2018 to benefit from the lower tax rate. However, the

buyer insists on a $10,000 discount on the sale price in exchange for a two week delay. There are

no alternative buyers. Our real estate broker has suggested we could sell the land on December

28, 2017 but wait until after January 1, 2018 to deposit the check. Is this suggestion feasible? I

am requesting your guidance on the tax treatment of the sale and any limitations that we need to

be aware of. This is the only asset we plan to dispose of in 2017.

As always, our CEO and CFO want us to defer income and accelerate deductions whenever

possible. We expect to be profitable in both years. Please let me know your thoughts on the

above.

Thanks,

Mandy Green

Financial Accountant

MTL Corporation

Note: The assignment will be graded by the Ernst & Young Communication Center (EYCC) to

provide you individualized professional feedback on your writing skills. Completed assignments

should be submitted via the Dropbox in D2L by 5:00pm on Thursday November 1, 2018.

Late assignments will not be accepted. Plagiarism, copying, or other academic misconduct will

result in a zero for this assignment and may be reported to the Dean’s office.

Here is a link to a video recording of EYCC’s presentation on business memo writing: https://mediaspace.msu.edu/media/Writing+Professional+Memos/1_m67ew3gi