Fall 2015—Tax II Project

                     Reed and Sue Richards run Fantastic—Stuff, Inc. a C corporation devoted to inventing stuff you wish you’d thought of. Reed is the CEO and Sue is the CFO. Their son, Franklin has joined the business and is the President handling the daily operations.

                     Reed owns 35% of the stock and Sue 25%. Sue has a basis of $80,000 in her shares, Reed $112,000. The FMV of the company is $4,700,000. The other shares are owned 20% by Ben Grimm (unrelated friend) and 20% by their son, Franklin.

                     Lately, Reed has felt stretched rather thin and would like to cut back. He wants to stay on as Chairman of the Board of Directors and CEO, but wants Franklin to take over more responsibility.

                     Sue has felt unappreciated—as if people didn’t see her at all. She will stay on as a director but otherwise wants to retire.

                     They will need income and so want to sell their stock and reinvest the proceeds. Franklin and Ben will take over most of the operational duties.

           Reed and Sue come to you and ask what to do. They like the concept of a sale as they have some $2,000,000 in capital losses (they invested equally) from a series of poor investments (Sue’s brother, Johnny, has a series of hot ideas that turned out to be just a flash in the pan).

           Reed suggests that the company redeem their shares—there is substantial cash and they will take notes for the balance. Ben is willing to buy some shares from them, about 10% ownership, but can’t do this until next year when he gets his allowance form his Aunt Petunia.

           Their stock is a capital asset and they have held it for 40 years. The company has some $2,000,000 in E & P.

                     Reed wants to do it this year—he hears the tax rates are going up next year. Reed & Sue are in the 35% bracket today.

If the Company redeems their shares what is the actual tax result for Sue and Reed and why?

What else could they do now?

What price delay? Sue wants to go on vacation and wait ‘till next year for the redemption. Is this wise? After all, what could go wrong (other than their latest movie)?

 

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Fama’s Llamas has a weighted average cost of capital of 8.9 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 7.9 percent. The tax rate is 35 percent. The company’s target debt-equity ratio is

Question:Fama’s Llamas has a weighted average cost of capital of 8.9 percent. The company’s cost ofequity is 12 percent, and its pretax cost of debt is 7.9 percent. The tax rate is 35…

 

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False Confessions

One of the most confusing aspects of wrongful convictions is the concept of false confessions. Why would someone admit to something they didn’t do? For this assignment, we will once again go the Innocence Project website:

Watch the video about false confessions, and write a one page reaction paper about what you have viewed.

1. What did you learn about how and why false confessions occur?
2. Do you think this is a problem- why or why not?
3. Do you agree or disagree with the Innocence Project’s proposed solutions to this problem?

 

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Fall of the House of Usher, excerpt

By Edgar Allan Poe

The room in which I found myself was very large and lofty. The windows were long, narrow, and pointed, and at so vast a distance from the black oaken floor as to be altogether inaccessible from within. Feeble gleams of encrimsoned light made their way through the trellised panes, and served to render sufficiently distinct the more prominent objects around; the eye, however, struggled in vain to reach the remoter angles of the chamber, or the recesses of the vaulted and fretted ceiling. Dark draperies hung upon the walls. The general furniture was profuse, comfortless, antique, and tattered. Many books and musical instruments lay scattered about, but failed to give any vitality to the scene. I felt that I breathed an atmosphere of sorrow. An air of stern, deep, and irredeemable gloom hung over and pervaded all.

Which of the following statements is most likely true about the narrator?

 He feels glad to be where he is.

 He wants to move into this house.

 He feels sad looking at this room.

 He is angry with someone who lives here.

 

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Microsoft Word – Fall 2016 718 666 Midterm Beer Chapters 1 2 8 Denison Chapters 1 2 3 U of W.docx

Case Incident #1: Developing a High Performance Service Culture

You are the newly hired human resource manager reporting to the owner of a new five-star resort hotel opening up on the white sand beaches of the western coast of Florida. For this new venture to succeed, you need to make sure that hotel employees focus on providing customers with the highest quality customer service possible. You are meeting to discuss how to create a high performance, high commitment culture that will promote such high-quality service, encourage employees to be committed to the hotel, and reduce the level of employee turnover and absenteeism, which are typically high in the hotel business.

Questions: (Each question is worth 10 marks each)

What kinds of organizational values and norms encourage employees to behave in ways that lead to high-quality customer service expected with a HCHP establishment? Using the concepts learned in the course thus far, discuss how you will create a HCHP culture that promotes the learning of these customer service values and norms?

Which factor is the most important determinant of the kind of culture you expect to find in a five-star hotel?

Case Incident #2: In the Boardroom Exercise

As manager of human resources for a large software development company, you deliver an annual report to the board of directors on human resource achievements, progress on current initiatives, and strategic goals for the next year. This year, you announce that you are enrolled part-time to take courses toward the CHRP designation. The board is flabbergasted and not sure why you are doing this. They argue that it is a waste of time since you have been practicing in the human resources field for the past nine-year and could probably teach the courses. The board does not see the value of the designation and refuses to provide financial support or release time for you to pursue your designation.

Questions: (Each question is worth 10 marks each)

1. Discuss what the CHRP designation is? 2. Using the information you learned from the recent on campus HRPA visit last week

discussing the CHRP designation and from your web research on the credential, how will you respond to this situation?

 

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