A finished ACC-669 Topic 1 separate taxpayer analysis memo example, keeping diverted fees in corporate income, treating them and a paid vacation as constructive dividends, and taxing retained profit at 21 percent. Searches like "acc 669 topic 1 assignment example", "acc669 topic 1 sample" and "acc-669 topic 1 example" land here.
What a finished ACC-669 Topic 1 separate taxpayer analysis memo looks like
The finished memo is written to the client and works one illustrative year. The corporation's contracts are in its own name, so $20,000 of fees she deposited personally remain its income, and taxable income is $150,000 with those fees included and the $12,000 vacation denied under section 162 as serving no business purpose. Section 11 applies its flat 21 percent to that figure, for $31,500 of corporate tax. The memo then turns to her side. The $20,000 of fees and the $12,000 vacation are $32,000 of constructive distributions, and because current earnings and profits of roughly $118,500 exceed them, sections 301 and 316 make the whole $32,000 a dividend. Retained profit is shown taxed once now and again when distributed. The memo cites Moline Properties for the premise that a corporation doing business is a separate taxpayer.
How an ACC-669 Topic 1 example is structured
The memo follows the order in which the client's three assumptions fail. It opens with the premise, stated in a sentence: the corporation is a taxpayer distinct from its owner, with its own return, its own income and its own tax. The first section applies that premise to the diverted fees, asking who earned them and finding the corporation did, since the contracts and the work run through it. The second takes the vacation, first at the corporate level, where no deduction is allowed, then at hers, where the payment is a distribution rather than wages, since no payroll was run. A short earnings and profits computation follows, because dividend treatment depends on it rather than on the label. The third section shows retained profit taxed at 21 percent now and again on distribution. A closing paragraph lists the accounts and records the corporation should keep apart from hers.
The premise stated before the facts
The memo opens by fixing the corporation as a separate taxpayer with its own return, so every later conclusion follows from one stated rule.
Fees taxed to the entity that earned them
Because the contracts name the corporation and it performed the work, the $20,000 deposited in her account is still corporate income before it is anything else.
A personal expense traced to both levels
The vacation earns no corporate deduction and reaches her as a constructive distribution, so one payment produces a consequence on each return rather than on one.
Earnings and profits checked, not assumed
Current earnings and profits of about $118,500 are computed before the $32,000 is called a dividend, since sections 301 and 316 make that treatment depend on them.
Retained profit taxed where it sits
Profit left in the corporation has already borne tax at 21 percent, and the memo shows the second layer waiting for the day it is paid out.
Where marks go in ACC-669 Topic 1
Papers that treat the corporation as an extension of its owner lose marks on all three facts at once, since each conclusion depends on the separate-taxpayer premise. Reporting the diverted fees only on her return skips the corporate income they first were, and understates the corporation's tax. Deducting the vacation as a business cost because the corporation paid it confuses who paid with why it was paid. Calling the $32,000 a dividend without an earnings and profits figure reaches the right label by assumption, and markers in many sections look for the computation specifically. Papers that recast the payments as salary need facts showing an intent to compensate, and a memo that ignores that alternative has not defended its own reading. Retained profit described as untaxed misses the corporate layer entirely.
Get an ACC-669 Topic 1 example written to your instructions
Send the ACC-669 Topic 1 instructions, your rubric and the fact pattern your section assigned. We write a custom example to them, with the separate-taxpayer premise stated, income placed with the entity that earned it, earnings and profits computed before any dividend label and both layers of tax shown, back in 24 to 48 hours. The first one is free.
ACC-669 Topic 1 questions, answered
What does Moline Properties stand for?
The Supreme Court held that a corporation formed for a business purpose, or carrying on business activity, is a separate taxable entity, even when one person owns and controls it. Its owner cannot disregard it when that would be convenient for tax. The memo cites the case for that premise only, which is the point every later conclusion depends on.
What is a constructive dividend?
A benefit a corporation confers on a shareholder without declaring a dividend, such as paying a personal expense or letting corporate receipts go to the owner. The label the parties use does not control. The payment is measured, tested against earnings and profits, and taxed as a dividend to the extent they cover it, while the corporation gets no deduction for it.
Why not treat the payments as salary?
Salary would give the corporation a deduction and give her wages, but that reading needs facts: an intent to compensate, amounts reasonable for services, and payroll reporting. None appear in this fact pattern, so the memo rejects the salary alternative and says why. Where an assignment supplies those facts, the analysis changes, and a custom example follows the facts given.