Both the SSTS and Circular 230 have been posted on Blackboard for your use in answering the following questions.

Answer the following questions using the SSTS’s or Circular 230.   For each question cite the Standard or page number and section number of Circular 230 for which your answer is based upon. (Member means tax preparer.)

(Disregard the page number)

______ 21.    A member may omit answering a question on a tax return if reasonable grounds exist for omitting the answer to a question applicable to the taxpayer.

SSTS: ___________________________________________

______ 22. A member should not omit an answer to a question because it might prove disadvantageous to the taxpayer.

SSTS: ___________________________________________

______ 23.   If reasonable grounds do not exist for omission of an answer to an applicable question, a taxpayer is not required to provide on the return an explanation of the reason for the omission.

SSTS: ___________________________________________

______ 24. A member shall make a reasonable effort to obtain from the taxpayer that the taxpayers has maintained books and records or substantiating documentation to support reported deduction or tax treatments of items on a tax return.   SSTS: ___________________________________________

______ 25. A member can use estimates if fire, computer failure, or natural disaster has destroyed the taxpayer’s records.

SSTS: ___________________________________________

______ 26. A practitioner may endorse or otherwise negotiate any check issued to a client if the client has authorized the practitioner to do so.

230: ___________________________________________

______ 27. Tax advisors should provide clients with the highest quality representation concerning Federal tax issues by adhering to best practices in providing advice and in preparing or assisting in preparation of a submission to the Internal Revenue Service.

230: ___________________________________________

______ 28. An enrolled agent has the same ability to practice before the Internal Revenue Service as does an attorney or CPA.

       230: ___________________________________________

______ 29. Practice before the Internal Revenue Service include preparing documents, filing documents, corresponding and communicating with the Internal Revenue Service and representing a client at conferences, hearings, and meetings.

230: ___________________________________________

______ 30. Enrolled Agents, enrolled retirement plan agents, and registered tax return preparers must renew their status with the Internal Revenue Service to maintain eligibility to practice before the IRS.

230: ___________________________________________

______ 31. A CPA may be denied to practice before the IRS if he or she has not filed their own individual income tax returns.

230: ___________________________________________

______ 32. An employee of the Mississippi Department of Revenue may not practice before the Internal Revenue Service if such employment may disclose facts or information applicable to Federal tax matters.

230: ___________________________________________

______ 33. In order to practice before the Internal Revenue Service, an individual must be twenty-one years old.

230: ___________________________________________

______ 34. An individual must pass a written examination administered by the Internal Revenue Service in order to receive status as an enrolled agent.

230: ___________________________________________

______ 35. An enrolled agent must complete a minimum of 72 hours of continuing education credit during an enrollment cycle with a minimum of 16 during each enrollment year.

230: ___________________________________________

______ 36. An enrolled agent must complete two hours of ethics or professional credit each enrollment year.

230: ___________________________________________

______ 37. A practitioner who, having been retained by a client with respect to a matter administered by the Internal Revenue Service, knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper which the client submitted or executed under the revenue laws of the United States, must advise the client promptly of such noncompliance, error, or omission.

230: ___________________________________________

______ 38. A practitioner should always exercise due diligence in determining the correctness or oral or written representations made by the practitioner to the Department of the Treasury.

230: ___________________________________________

______ 39. A practitioner should not publish the availability of a written schedule of fees and disseminate since it may be considered to be advertising.

230: ___________________________________________

______ 40. A practitioner should refrain from any type of advertising.

230: ___________________________________________

______ 47. A practitioner may not use or disclose any return information without the consent of the taxpayer in any situation.

230: ___________________________________________

______ 48. A practitioner may advise a client to submit a document, affidavit, or other paper to the IRS if it contains information that demonstrates an intentional disregard of a rule or regulation unless it, in conjunction with other documentation, in good faith, challenges the rule or regulation.

230: ___________________________________________

______ 49.   A practitioner must possess the necessary competence to engage in practice before the Internal Revenue Service.

230: ___________________________________________

______ 50.   A practitioner may not represent two separate clients if the representation of one will adversely affect the position of the other.

230: ___________________________________________

Grazyna owns a restaurant in Bozeman, Montana, called the Bluehorn Buffalo Diner. Her restaurant is very popular among Californian Sacramento residents who visit her town and restaurant in large numbers during the summer. With the recent expansion and remodeling of her restaurant, she has decided to run television ads in Sacramento during the winter to promote her renewed restaurant. So, she contacted you because of your position as the television advertising salesperson of a main TV channel in Sacramento. Grazyna wants to know whether her restaurant’s campaign would be more effective being broadcasted on a news program, sit com, or talk show. You answered that she needs to consider three variables: reach, frequency, and revenue per ad dollar. Using Skype, you gave a PowerPoint sales presentation explaining the variables and corresponding concepts in relation to the three campaigns that Grazyna requested. You said that: Reach and frequency are terms typically used when planning an advertising campaign. Reach is the number of people who are exposed at least once to an advertising message over a specific period of time, usually four weeks. Frequency is the number of times a person is subjected to an advertising message over a certain interval of time. You added that it is important to determine which is more effective, to touch 100 viewers once or 25 viewers four times? Impressions refer to the total number of exposures to your advertisement (i.e., reach multiplied by frequency). The media cost is the price you pay the TV channel to broadcast your advertisement. The target market is the total number of people who could potentially be exposed to your advertisement. The rating is a number, ranging between 0 and 100, that corresponds to the amount of estimated viewers of a particular television program (or, the target market size reached by a campaign when it is broadcasted on a local TV program). These data are sourced from surveys or research companies such as Nielsen. Using the data below, you worked with Grazyna to calculate the revenue per ad dollar of the three TV campaigns being broadcast to Sacramento viewers during various programs. Television Campaign: Local News Program Number of Spots: 5

Rate (Ad Cost per Spot): $80,000 Target Market (Sacramento, CA): 466,488

Rating (Obtained from Nielsen Data): 3.8

Revenue per Impression (Obtained from Company Data): $65

Television Campaign: Local Sitcom Number of Spots: 8 Rate: $35,000

Target Market: 466,488 Rating (Obtained from Nielsen Data): 2.5

Revenue per Impression: $45

Television Campaign: Local Talk Show Number of Spots: 10

Rate: $15,000

Target Market: 466,488

Rating (Obtained from Nielsen Data): 1.6

Revenue per Impression: $25

What is the media cost of each of the three campaigns?

Local News Program:

Sitcom:

Talk Show:

What is the reach of each of the three TV campaigns?

1: Local News Program:

Sitcom:

Talk Show:

3. What are the impressions of each of the three TV campaigns?

Local News Program:

Sitcom:

Talk Show:

4. What is the revenue per ad dollar of each of the three TV campaigns?

Local News Program:

Sitcom:

Talk Show:

5. You also explained to Grazyna the example of a company that generates $1,000 for every $500 invested in a TV campaign has a revenue per ad dollar of 2. If it generates $10,000 for every $1,000 invested in another TV campaign, then it has a revenue per ad dollar of 10. Which of Grazyna’s TV campaigns is the most effective?

Talk Show TV Campaign

• Sitcom TV Campaign

• News Program TV Campaign

Blades, Inc. Case

Forecasting Exchange Rates

Recall that Blades, Inc., the U.S.-based manufacturer of roller blades, is currently both exporting to and importing from Thailand. Ben Holt, Blades’ chief financial officer (CFO), and you, a financial analyst at Blades, Inc., are reasonably happy with Blades’ current performance in Thailand. Entertainment Products, Inc., a Thai retailer for sporting goods, has committed itself to purchase a minimum number of Blades’ Speedos annually. The agreement will terminate after three years. Blades also imports certain components needed to manufacture its products from Thailand. Both Blades’ imports and exports are denominated in Thai baht. Because of these arrangements, Blades generates approximately 10 percent of its revenue and 4 percent of its cost of goods sold in Thailand.

Currently, Blades’ only business in Thailand consists of this export and import trade. Holt, however, is thinking about using Thailand to augment Blades’ U.S. business in other ways as well in the future. For example, Holt is contemplating establishing a subsidiary in Thailand to increase the percentage of Blades’ sales to that country. Furthermore, by establishing a subsidiary in Thailand, Blades will have access to Thailand’s money and capital markets. For instance, Blades could instruct its Thai subsidiary to invest excess funds or to satisfy its short-term needs for funds in the Thai money market. Furthermore, part of the subsidiary’s financing could be obtained by utilizing investment banks in Thailand.

Due to Blades’ current arrangements and future plans, Holt is concerned about recent developments in Thailand and their potential impact on the company’s future in that country. Economic conditions in Thailand have been unfavorable recently. Movements in the value of the baht have been highly volatile, and foreign investors in Thailand have lost confidence in the baht, causing massive capital outflows from Thailand. Consequently, the baht has been depreciating.

When Thailand was experiencing a high economic growth rate, few analysts anticipated an economic downturn. Consequently, Holt never found it necessary to forecast economic conditions in Thailand even though Blades was doing business there. Now, however, his attitude has changed. A continuation of the unfavorable economic conditions prevailing in Thailand could affect the demand for Blades’ products in that country. Consequently, Entertainment Products may not renew its commitment for another three years.

Because Blades generates net cash inflows denominated in baht, a continued depreciation of the baht could adversely affect Blades, as these net inflows would be converted into fewer dollars. Thus Blades is also considering hedging its baht-denominated inflows.

Because of these concerns, Holt has decided to reassess the importance of forecasting the baht-dollar exchange rate. His primary objective is to forecast the baht-dollar exchange rate for the next quarter. A secondary objective is to determine which forecasting technique is the most accurate and should be used in future periods. To accomplish this, he has asked you, as the financial analyst at Blades, for help in forecasting the baht-dollar exchange rate for the next quarter.

Holt is aware of the forecasting techniques available. He has collected some economic data and conducted a preliminary analysis for you to use in your analysis. For example, he has conducted a time-series analysis for the exchange rates over numerous quarters. He then used this analysis to forecast the baht’s value next quarter. The technical forecast indicates a depreciation of the baht by 6 percent over the next quarter from the baht’s current level of $.023 to $.02162. He has also conducted a fundamental forecast of the baht-dollar exchange rate using historical inflation and interest rate data. The fundamental forecast, however, depends on what happens to Thai interest rates during the next quarter and therefore reflects a probability distribution. Based on the inflation and interest rates, there is a 30 percent chance that the baht will depreciate by 2 percent, a 15 percent chance that the baht will depreciate by 5 percent, and a 55 percent chance that the baht will depreciate by 10 percent.

Holt has asked you to answer the following questions:

1Considering both Blades’ current practices and future plans, how can it benefit from forecasting the baht-dollar exchange rate?

2. Use the fundamental forecasting techniques to forecast the future of the baht

Blades, Inc. Case

Forecasting Exchange Rates

Recall that Blades, Inc., the U.S.-based manufacturer of roller blades, is currently both exporting to and importing from Thailand. Ben Holt, Blades’ chief financial officer (CFO), and you, a financial analyst at Blades, Inc., are reasonably happy with Blades’ current performance in Thailand. Entertainment Products, Inc., a Thai retailer for sporting goods, has committed itself to purchase a minimum number of Blades’ Speedos annually. The agreement will terminate after three years. Blades also imports certain components needed to manufacture its products from Thailand. Both Blades’ imports and exports are denominated in Thai baht. Because of these arrangements, Blades generates approximately 10 percent of its revenue and 4 percent of its cost of goods sold in Thailand.

Currently, Blades’ only business in Thailand consists of this export and import trade. Holt, however, is thinking about using Thailand to augment Blades’ U.S. business in other ways as well in the future. For example, Holt is contemplating establishing a subsidiary in Thailand to increase the percentage of Blades’ sales to that country. Furthermore, by establishing a subsidiary in Thailand, Blades will have access to Thailand’s money and capital markets. For instance, Blades could instruct its Thai subsidiary to invest excess funds or to satisfy its short-term needs for funds in the Thai money market. Furthermore, part of the subsidiary’s financing could be obtained by utilizing investment banks in Thailand.

Due to Blades’ current arrangements and future plans, Holt is concerned about recent developments in Thailand and their potential impact on the company’s future in that country. Economic conditions in Thailand have been unfavorable recently. Movements in the value of the baht have been highly volatile, and foreign investors in Thailand have lost confidence in the baht, causing massive capital outflows from Thailand. Consequently, the baht has been depreciating.

When Thailand was experiencing a high economic growth rate, few analysts anticipated an economic downturn. Consequently, Holt never found it necessary to forecast economic conditions in Thailand even though Blades was doing business there. Now, however, his attitude has changed. A continuation of the unfavorable economic conditions prevailing in Thailand could affect the demand for Blades’ products in that country. Consequently, Entertainment Products may not renew its commitment for another three years.

Because Blades generates net cash inflows denominated in baht, a continued depreciation of the baht could adversely affect Blades, as these net inflows would be converted into fewer dollars. Thus Blades is also considering hedging its baht-denominated inflows.

Because of these concerns, Holt has decided to reassess the importance of forecasting the baht-dollar exchange rate. His primary objective is to forecast the baht-dollar exchange rate for the next quarter. A secondary objective is to determine which forecasting technique is the most accurate and should be used in future periods. To accomplish this, he has asked you, as the financial analyst at Blades, for help in forecasting the baht-dollar exchange rate for the next quarter.

Holt is aware of the forecasting techniques available. He has collected some economic data and conducted a preliminary analysis for you to use in your analysis. For example, he has conducted a time-series analysis for the exchange rates over numerous quarters. He then used this analysis to forecast the baht’s value next quarter. The technical forecast indicates a depreciation of the baht by 6 percent over the next quarter from the baht’s current level of $.023 to $.02162. He has also conducted a fundamental forecast of the baht-dollar exchange rate using historical inflation and interest rate data. The fundamental forecast, however, depends on what happens to Thai interest rates during the next quarter and therefore reflects a probability distribution. Based on the inflation and interest rates, there is a 30 percent chance that the baht will depreciate by 2 percent, a 15 percent chance that the baht will depreciate by 5 percent, and a 55 percent chance that the baht will depreciate by 10 percent.

• Using all following three techniques to forecast the future of the baht

  • Fundamental forecasting

  • Market-based forecasting

  • Technical forecasting including the performance evaluation bias and its graphic evaluation

Case Study: Identifying and creating new markets - a new strategy for a global leader

Introduction

Nearly everyone is aware of Intel. It is the world's fifth most valuable brand valued at around $35 billion. Most of the world's personal computers are driven by Intel microprocessors.

By concentrating on producing great microprocessors Intel was able to leave its competitors behind. The company invested billions of dollars in highly productive manufacturing plants that could produce more processors in a day than some of their rivals could produce in a year.

Today Intel is continuing to raise the bar. In January 2006 the company launched its new strategy based on identifying and creating new markets. Instead of just focusing on personal computers (PCs) Intel will play a key technological role in a range of fields including consumer electronics, wireless communications and healthcare.

Intel has been one of the world's high achieving businesses. Its global appeal is not surprising. In recent years almost every time you opened up a laptop you would see that it was labelled 'Intel@ Inside'. Seeing this, the user knew that they had a high performing and reliable computer.

We all want to be able to use more powerful technology, which is simple to operate, and helps us to do things without having to think about it. However, Intel has moved on. The problem with simply being a producer of processors is that other firms can move into your market. Once they produce similar products the only way you can differentiate is by offering lower prices.

Intel's new strategy is to create lots of different types of chips and software and then combine them together into platforms. A platform is an integrated set of proven technologies designed to work together. They provide people and businesses with improved communications and computing capabilities. These platforms will enable Intel to bring added value for consumers, win a larger share of consumer expenditure and increase revenue.

Platforms will make life easier for people in a range of settings from the home, to business, and medical settings. Intel's vision involves giving people access to easy-to-use technologies through these platforms. It is seeking to continually satisfy customer requirements by producing a range of new and exciting products.

Developing a new strategy

Intel is an 'ingredient brand'. Its products and processors form part of the products that consumers purchase. Building key relationships with leading electronic firms such as Sony and Philips is an important strategy. The aim is to provide the manufacturers of products such as laptops, mobile phones and entertainment personal computers with integrated packages of chips and software - in other words a complete solution.

A key part of Intel's more integrated platform strategy involves the development of several technologies. These improve processor efficiency and allow computer users to take better advantage of:

multi-tasking

security

reliability

manageability

wireless computing capabilities.

Intel's strategy is to be at the heart of new developments in home entertainment, security, medical care, etc. Great results are achieved through developing the right products for the right markets before competitors do so.

Restructuring Intel around its market

Intel built its early success on providing ingredients for personal computers with its prime driver being technology. It was dominated by engineers and worked closely with Microsoft and PC manufacturers such as Dell, Compaq and IBM.

The new strategy continues the emphasis on producing excellent products. However, there is now a strong focus on marketing- finding out what customers want and then meeting their requirements. Customers need to know what these new products can do for them. Clear communication is therefore essential. The emphasis is on marketing and communicating with customers about what the new technologies can do for them.

Conclusion

Intel is one of the success stories of the high-tech world. It provides vital components for personal computing. Now the company is moving forward into a range of new and exciting products and markets with a much stronger focus on marketing

Read the above case study and answer the following questions:

1. Investigate how the micro environment and the macro environment have an effect on its marketing and business.

2. Analyze the STP (Segmentation, Targeting and Positioning) strategies of the organization. Evaluate its marketing mix which leads to achievement of consumer satisfaction and organizational goals.

3. Develop strategies that could result in the organization taking better marketing decisions.

Note the Answers should be computerized and answered in details - Please do not copy and Paste

Royal West Airlines Ltd.
Income Statement
For the Year Ended December 31, 2020
Sales revenue $2,561,096
Cost of sales (1,003,860)
Gross margin $1,557,236
Other expenses ( 890,743)
Net income, before income tax $ 666,493
Royal West Airlines is a regional airline that services Western Canada.
Notes:
a) $10,000 in legal fees relating to the restructuring of a debt.
b) A brand new airplane costing $65,000 used to service a new route
c) Interest on late municipal tax balances of $1,000
d) Sponsorship of a local musical production costing $9,240
e) Convention that was held in Barcelona, Spain costing $3,300
f) Interest expense of $4,000 that was associated with the acquisition of a GIC
g) Cost of sponsoring local hockey teams $500
h) Food and entertainment for clients $60,000
i) Life insurance premiums on the life of the president (required by the bank) $2,000
Item 1. During the year the Company spent $6,500 for landscaping its head office grounds.
For accounting purposes this cost was deducted in the year
Item 2. The Other Expenses account included the following amounts:
Item 3. The Other Income and losses account included the following amount:
$32,000 spent on a staff Christmas party where all employees were invited to
attend the event.
Item 6. All of Royal’s remaining capital assets are Class 1 which related to an office
building that was purchased in 2019. The UCC at the beginning of 2020 was $625,100.
On July 1, the Company added an additional room for $20,000. No Class 1 assets were
disposed of in the year.
Item 5. In 2020, the Company deducted $21,000 bad debt expense based on a review
of specific accounts.
Item 4. For tax purposes, the machinery that was sold was a Class 10 asset. All assets
in class were disposed of. The machinery was purchased for $15,000 and its UCC
balance at the beginning of 2020 was $10,250. The asset was sold in 2020 for
$14,600.
Required:
Complete the table below and show the adjustments that would be required in Royal West Airlines 2020
SCHEDULE 1 for each item listed in the question. For each item, show whether it adds to NITP by
marking “+” in the appropriate column, a “-“ mark if it subtracts from NITP, and a “na” mark if it is not
applicable.
Description
Addition (+)
Subtraction (-)
(na)
$ amount
Citation
Net Income for accounting
$666,493 9(1)
Item 1.
Item 2. a)
b)
c)
d)
e)
f)
g)
h)
i)
Item 3.
Item 4.
Item 5.
Item 6.

QUESTION 1)

Revenue: 10,635,119

COGS: 7,872,775

Gross margin: 2,762,344

Expenses:

Employee admin sal.: 673,475

Employee benefits: 30,162

Info technology, computer repairs: 33,860

telecommunications: 23,874

unsaleable product damage, expired, shortage: 53,170

facilities, rent, amortization: 31,609

automobile including amortization: 62,500

foreign exchange (gains) losses, realised and unrealized: 88,445

customer discounts/rebates and commissions: 160,658

transportation of inventory: 801,523

insurance for inventory: 15,184

stroage costs for inventory: 45,700

interest and bank charges: 15,910

consulting fees: 22,511

advertising, entertainment: 62,520

Total = 2,121,101

Net Income = 641,243

INSTRUCTIONS:

PART A) Please help do a cost/benefit analysis based off the information given above. The operating system suggests that the cost of goods sold is most likely UNDERSTATED, as only the purchase costs paid to the suppliers are captured.

Please re-calculate COGS to make sure that it is an accurate number.

QUESTION 2)

(built off from question 1) - The consultant has quoated the cost of the new software at 100,000. there would also be a hardware upgrade required for 12,000, an annual licensing/operating cost of 13,000, which is 11,000 more than the existing system. You estimate that training in terms of outside help, replacement staff, and staff time to cost is 17,000, of which is 10,000 is for intiial training and 7,000 for additional post-implimentation training. Its estimated that a one year time frame is required for staff to become familiar with the system. Training is to start one month after the software set-up. There are 100 hours allocated for training over the first year. Its estimated that inventory - which is at a steady level during the year - will be reduced by 10% due to the better information of the new system. (they have inventory turn of 20 times.) Also, they would represent an annual saving of 10%. There is also an estimated 10% saving in employee administation salaries from a reduction in manual entries, duplication, and quicker transaction processing. Cash flow should also improve, becaues of the reduction of inventory as noted, which would decrease the interest and bannk charge cost by 15%.

INSTRUCTIONS:

PART B) Do a cost/benefit analysis of this new accoutning software. calculate the benefits from the info given. How long will it take to get a return on the investment (just a simple payback is fine) under different assumptions (like will the firm get all the benefits in year 1 or might it take a year or 2 – also do scenarios around growth rates as that could have an impact).

Louis Ruiz Consulting Services has five accounts in its initial trial balance: Cash, Accounts Payable, Ruiz Capital, Telephone Expense and Consulting Revenue. Using the chart for making journal entries, which account is listed third in the trial balance for the consulting services business?

A. Cash B. Accounts Payable C. Ruiz Capital D. Telephone Expense E. Consulting Revenue