To: John and Jane Smith
From:
Date: 3/3/2014
Re: Memo summarizing various tax issues
1. John Smith's Tax Issues
Issue (a): How is the $300,000 treated for purposes of federal tax income?
Applicable Law and Analysis
Conclusion
Issue (b): How is the $25,000 treated for purposes of federal tax income?
Applicable Law and Analysis
Conclusion
Issue (c): What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?
Applicable Law and Analysis
Conclusion
Issue (d): Do I get better tax benefits for paying the lease on office space or for buying the building? What are the differences?
Applicable Law and Analysis
Conclusion
2. Jane Smith’s Tax Issues
Issue (a): What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for federal income tax purposes?
Applicable Law and Analysis
Conclusion
Issue b) Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John's case?
Applicable Law and Analysis
Conclusion
Issue (c): Does Jane have a business or hobby? Why is this distinction important?
Applicable Law and Analysis
Conclusion
Issue (d): Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry-making activities?
Applicable Law and Analysis
Conclusion
Issue (e): What tax benefits would John realize if he invested $15,000 in Jane's jewelry making?
Applicable Law and Analysis
Conclusion
Issue (f): Can Jane depreciate her vehicle or jewelry-making equipment? How?
Applicable Law and Analysis
Conclusion
3. John and Jane Smith’s Tax Issue
Issue (a): Should John and Jane file separate or joint tax returns?
Applicable Law and Analysis
Conclusion
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