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6 Apr 2019

You have been asked by a business director (BD) to attend a strategy meeting. The business wants to expand into India. The BD states that he’s heard of the law called the FCPA. He wants to know what it is and does it impact his efforts to develop business in India? Please respond in a memo to the BD

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Nestor Rutherford
Nestor RutherfordLv2
6 Apr 2019

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In each of the following situations, identify one or more waysthat cultural differences may be leading to miscommunication.

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3. Stan wants to negotiate a joint venture with an Asiancompany. He asks Tung-Sen Lee if the people have enoughdiscretionary income to afford his product. Mr. Lee is silent for atime, and then says, “Your product is good. People in the West mustlike it.” Stan smiles, pleased that Mr. Lee recognizes the qualityof his product, and he gives Mr. Lee a contract to sign. Weekslater, Stan still hasn’t heard anything. If Asians are going to beso non-responsive, he wonders if he really should try to dobusiness with them.

4. Elspeth is very proud of her participatory management style.On assignment in India, she is careful not to give orders but toask for suggestions. But people rarely suggest anything. Even aformal suggestion system doesn’t work. And to make matters worse,she doesn’t sense the respect and camaraderie of the plant she man-aged in the United States. Perhaps, she decides gloomily, people inIndia just aren’t ready for a woman boss.

Bob has a very successful used car business located at 210 Ocean View Drive in Pensacola, Florida. Last year, you filed a Schedule C for Bob that had $1,200,000 in taxable income. The business will have an income growth rate of 10% per year over the next several years. Bob’s personal wealth, including investments in land, stocks, and bonds, is about $14,000,000. Last year, he reported interest income of $20,000 and dividend income of $6,000. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000. The stocks and bonds have a tax basis of $1,200,000 and they are currently worth $5,000,000. All of the investments have been owned for more than a year. In addition to his investments, Bob paid $140,000 for his home in 1972 and it is now worth $600,000. The used car business is currently valued at $53,000,000 including the land and building, which are worth $41,000,000. Bob’s tax basis in the land and building is $2,000,000 and $400,000, respectively. The inventory is worth $12,000,000, with a cost basis of $5,000,000; the remaining assets, which include office furniture and equipment, make up the remainder of the business’s total value. The office furniture and equipment are fully depreciated. Bob wants your professional advice regarding whether he should continue to operate as a sole proprietor or convert the business to a partnership, an S corporation, or a C corporation. Based on one of the business entities selected, Bob wants to include Mandy—his daughter—in the business as an owner and manager with a possibility of 40% interest. One of his concerns is what would happen to his business after he passes away. Mandy’s personal tax information is as follows: Mandy Jones DOB: June 30, 1990 SSN: 999-99-9999 Marital Status: Single Home Address: 5990 Langley Road, Pensacola, FL 35203 You will need to describe the tax and limited liability effects on a chosen business entity should Bob decide to reduce the amount of tax paid per year, as well as the protection of personal assets should there be a possible claim against the company’s assets.

Please help me to Interpret the tax law pertaining to a S corporation business and justify my recommendation using details consistent with tax law, code, and regulations.


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Sam also indicated that there was some chatter in his tax department that the law was unclear on this matter and that he would have to evaluate his tax situation two ways; 1) as if he met a so called safe-harbor; and 2) as if he did not meet the safe-harbor.


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