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case study 1

case study 1

 Scenario

You are an enrolled agent with a new tax client Xavier Garcia. Xavier plans to start a shipping supply business like the UPS Store. Xavier wants to know what entity structure would be best for his business. He will be the only owner, but in the future, he may want to add partners or stockholders depending on your recommendations.

In addition, Xavier wants to know if he should track inventory for his store and which inventory identification and valuation method would be right for his business. Finally, Xavier wants to know about the tax advantages for each business entity and your recommendation on recording inventory.

Answer the following questions.

  1. Discuss all advantages and disadvantages of each of the business entities you learned about in this lesson.
  2. Identify which entity would fulfill Xavier’s requests.
  3. Discuss the different identification methods to value inventory and which method would work for your entity selection. You must include the valuation method for your choice of identification method.
  4. Provide evidence to support your choice using your two required sources.