Document Type:Research Paper

Subject Area:Accounting

Document 1

Therefore, there is a consideration to incur a little tax income liability due to their retirement from active income productivity and concentration on their active social life. A client File Memorandum illustrates the possible strategies the client can use in converting their investment portfolios into efficient use or single portfolio asset that incurs little income tax liability to the client. The goal of the research is to analyze the investment assets and identify how they can be converted into one portfolio to lift the high taxation on the part of the client. The strategies are a legal way of reducing the tax burden as illustrated by the International Reporting Standards. It is a commonly recommended method to converge all the portfolio investments into one current portfolio asset.

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The tax burden for the property may be high to add any value to the client. There is, therefore, the need to give consultative recommendations to the client through legal and financial analysis. Issue and Conclusion 1 Is the client entitled to giving out the property to his kids? Yes, Children are entitled to inheritance from the parents. Analysis 1 The tax burden on the properties owned can be high to sustain in the long run. Sub-division of the property to the children will help reduce the burden on the parent. The transfer of responsibility gives the second party, that is the children of the client a legal obligation to continue transactions of tax remittance to the properties they are paying. If at some point the children will sell the property then they are liable to the capital gains taxation deducted against the number of proceeds they earn from the sale of the property.

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Issue and Conclusion 2 Alternative way the client can use the property? The Client can invest in Real Estate Investment Trust. Analysis 2 Investment in real estate offers a tax-efficient market for the investor. An investor can engage their portfolio in a Real Estate Investment Trust because they are tax-exempt and pay the shareholders at least 90% of the profit. The clients need to consider that; this will reduce the level of the tax burden as they will be taxed as a single portfolio asset. On the company's proposal of the dividends to be paid, the client needs to re-invest in the acreages of the real estate that were not yet covered to increase the shareholding in the Trust Fund. Issue and Conclusion 3 How can its wok if the client gives the property to a charitable organization? Properties disposed to charity are tax-exempt and do not accrue any tax.

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Analysis 3 For the client, Charitable donations are not liable to taxation, and therefore of the annual income may not be subjected to taxation. It means they can as well dispose the property to the charitable organization and avoid the instances of paying taxes on the property no in use. The client can enjoy the proceeds instead of subjecting it to taxes when the property is not earning any income. Sometimes the failure to pay the property rates incurs the company accumulated rates that in the long-run remain a burden to the owner. One need not consider leasing the property as it is alleged that the real estate can accumulate the various capital gains tax on the property leased. Legal documentation of a lease determines the tax treatment of the contract.

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