Industrial Automation Solutions: Norvell Group and Associates Manufacturers Review

Topics: Tax, Taxation in the United States, Taxation Pages: 5 (1473 words) Published: September 20, 2012
AC600 Week 1 Assignment
Keller Graduate School of Management of DeVry University

Define the major problem or problems
As stated from the court documents, Jeremy Blackburn, of Canopy’s former president and chief operating officer and Anthony Banas, Canopy’s chief technology officer used false information about Canopy’s financial condition including a false auditor’s report and falsified bank statements to fraudulently obtain around $75 million from several private equity investors during the year 2009. The report also stated that around $39 million of that money was used to redeem shares of other Canopy investors, including $1.6 million that went to Jeremy Blackburn and $975,000 that went to Anthony Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts. Jeremy Blackburn and Anthony Banas also misappropriated Canopy operating funds for their own benefit which lead to one account of wire fraud (United States of America v. Jeremy Blackburn and Anthony Banas) What has happened to the key players since the events in this case? Anthony Banas, Canopy’s chief technology officer, was sentenced to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced to 180 months in prison. The judge also ordered that both party pay a mandatory restitution totaling $93,125,918 (United States of America v. Jeremy Blackburn and Anthony Banas). They had to pay this because they were guilty of wire fraud and a fraud scheme that cheated investors out of money. Jeremy Blackburn took his own life on March 19, 2012 of this year. Jeremy Blackburn death is not being investigated as a homicide as state by Lee County coroner (Chicago Tribune). No matter what issues Jeremy Blackburn faced, I have never understood the path of self destruction. I don’t grasp how you get to the point of no return; to point where someone says enough is enough. What is your determination regarding reducing the taxable amount of income for both the $300,000 fee and $25,000 expenses? According to federal law, the $300,000 is considered to be income which creates a tax liability. There is a legal obligation to disclose a tax liability, and refusal to report it is tax evasion. The $25,000 should be reported as an ordinary expense which lowers tax liability. If you make contributions to an IRA or another form of retirement plan before taxes, your LLC tax liability will be reduce by the amount of your contribution.

What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for Federal income tax purposes? Taxpayers may deduct interest on loans secured by first or second homes, but the homes must be “qualified residences”. A home is a qualified residence if it is the taxpayer’s principal residence or if it is a second residence designated for this purpose that is used for personal purposes for more than the greater of 14 days or 10 percent of the number of days it is rented (such as a vacation home). Qualified residence interest on mortgage (debt) is deductible. (2011 CCH Federal Taxation). If you itemize income tax deductions and fully deduct your mortgage interest, you might not want to prepay your mortgage. By paying extra each month, you will be paying less interest overall and, as a result, your interest deductions will be reduced. In deciding whether to prepay your mortgage, you’ll have to consider the effect of lower interest deductions on your income taxes.

Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John’s case? A 1031 tax exchange involves exchanging like-kind property held for investment or business purposes. Property qualifying for like-kind exchange treatment must be held either for productive use in a trade or business or for investment. However, business property...
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