fbpx

Tax Savings for Starbucks Assignment | Top Universities

Your client, Smartbucks, a U.S. corporation conducts a major part of its coffee business through its wholly-owned international subsidiary, Trader Jobs, located on the Turks and Caicos Island. As Smartbuck’s accountants, your firm does the tax planning for these two related companies to minimize or avoid the payment of taxes by Smartbucks in the US which is a higher tax jurisdiction than Turks and Caicos jurisdiction.

Don't use plagiarized sources. Get Your Assignment on
Tax Savings for Starbucks Assignment | Top Universities
Just from $13/Page
Order Now

Top Universities

 

In the past Smartbucks sold industrial coffee equipment to Trader Jobs. Trader Jobs then sold the same equipment for profit. The profits from those sales were reported and taxed in the Turks and Caicos, which resulted in significant tax savings for Starbucks. Your firm explained to your client that this transaction, known as “transfer pricing,” allows Smartbucks to shift profits

that would otherwise be subject to U.S. tax offshore to avoid tax. Your firm wants to use the same method to identify and shift costs between Smartbucks and Trader Jobs.

Specifically, Starbucks has formulated a new latte coffee recipe with Trader Jobs and both companies would benefit taxwise if the research and development costs could be shared between them. To document the transaction, Smartbucks and Trader Jobs entered into a research and development (“R&D”) cost-sharing agreement which allows Trader Jobs the authority to license the new recipe internationally. You previously advised your client that the interplay of cost and income allocation between the two companies in this transaction will result in significantly reduced taxes for Smartbucks.

You also advised your client that there is some risk in engaging in multinational corporate tax

avoidance because the tax laws grant the IRS authority to allocate income and costs between related parties if it determines that any particular transaction fails to satisfy the arm’s length standard. As part of the R&D cost-sharing agreement, your firm did not share the cost of certain employee stock options resulting in substantial tax savings to Smartbucks in association with over $100 million in income. The IRS has reviewed the transaction and contends that the allocation of stock compensation costs between the companies must be appropriate to reflect

economic reality and that the allocation of the employee stock compensation costs under the cost-sharing arrangement fails the arm’s length standard. On behalf of Starbucks, your firm contends that the IRS has exceeded its authority under the arm’s length standard because the cost-sharing methodology used in the R&D cost-sharing agreement established “parity with uncontrolled taxpayers” and the actual results or economic reality is irrelevant under the arm’s length standard. Methodology controls over the result.

Prepare a tax memorandum for use in advising your firm’s managing partner assigned to Smartbucks. State the issue(s) to be resolved and make sure to identify the specific authorities (code, statutes, case law, etc.) that address your client’s tax issues. Make sure to weigh authorities both for and against your client’s position. Get Accounting Homework Help Today.

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

At Myhomeworkwriters.com, we always aim at 100% customer satisfaction. As such, we never compromise o the quality of our homework services. Our homework helpers ensure that they craft each paper carefully to match the requirements of the instruction form.

Professional Academic Writers

With Myhomeworkwriters.com, every student is guaranteed high-quality, professionally written papers. We ensure that we hire individuals with high academic qualifications who can maintain our quality policy. These writers undergo further training to sharpen their writing skills, making them more competent in writing academic papers.

Affordable Prices

Our company maintains a fair pricing system for all academic writing services to ensure affordability. Our pricing system generates quotations based on the properties of individual papers.

On-Time delivery

My Homework Writers guarantees all students of swift delivery of papers. We understand that time is an essential factor in the academic world. Therefore, we ensure that we deliver the paper on or before the agreed date to give students ample time for reviewing.

100% Originality

Myhomeworkwriters.com maintains a zero-plagiarism policy in all papers. As such, My Homework Writers professional academic writers ensure that they use the students’ instructions to deliver plagiarism-free papers. We are very keen on avoiding any chance of similarities with previous papers.

Customer Support 24/7

Our customer support works around the clock to provide students with assistance or guidance at any time of the day. Students can always communicate with us through our live chat system or our email and receive instant responses. Feel free to contact us via the Chat window or support email: support@myhomeworkwriters.com.

Try it now!

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Homework Writing Services

My Homework Writers holds a reputation for being a platform that provides high-quality homework writing services. All you need to do is provide us with all the necessary requirements of the paper and wait for quality results.

Essays

Essay Writing Services

At My Homework Writers, we have highly qualified academic gurus who will offer great assistance towards completing your essays. Our homework writing service providers are well-versed with all the aspects of developing high-quality and relevant essays.

Admissions

Admission and Business Papers

With Myhomeworkwriters.com, we will help you secure a position at your desired institution. Our essay writing services include the crafting of admissions papers. We will still help you climb your career ladder by helping you write the official papers that will help you secure a job. We will guide you on how to write an outstanding portfolio or resume.

Editing

Editing and Proofreading

Myhomeworkwriters.com has a professional editorial team that will help you organize your paper, paraphrase it, and eliminate any possible mistakes. Also, we will help you check on plagiarism to ensure that your final paper posses quality and originality.

Coursework

Technical papers

My Homework Writers harbors professional academic writers from diverse academic disciplines. As such, we can develop homework writing services in all academic areas. The simplicity or complexity of the paper does not affect the quality of homework writing services.