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Cambro Construction Company hires union carpenters for home building. Cambro requires, as a condition of employment, that the carpenters provide and maintain various tools of their trade. Cambro pays each carpenter a set amount per hour as a “tool allowance” to cover the costs of the tools. This amount is determined quarterly based on national complied data on the costs of carpenter tools. How should this employee reimbursement be treated for tax purposes?
Your responsibility:
Prepare a tax research memo for your files regarding the tax treatment of the employee reimbursement? You will need to support your conclusion using primary sources of tax law. Your textbook is NOT primary authority.
You must use proper citation form in your memo (see Chapter 2 for help with citation form). The form for this communication should be professional and in the form of a tax research memo (example posted on Blackboard and a similar example in your text on p. 2-27). Do yourself a favor and look at the grading rubric before you submit.
This memo should be whatever length you feel is appropriate to resolve the issues. We do NOT use a bibliography or list of references in a tax research memo. You will see that citations are within the text of the document in the example. Once a court case has been cited in full, it can be referred to using simply the name in italics.
For this assignment, points are distributed as follows:
Content – Facts
10
Content – Analysis
20
Content – Conclusion
10
Organization
5
Audience
5
Style
10
Mechanics
10
Referencing
10
Total
80
Tax research memo
Date:
To:
From:
Subject:
Fact:
Issue:
Law and analysis:
Conclusion: