Business Tax Return Preparation Assignment

• In Event: Reception with ELS and Research Interaction Forum Posters
  In Poster Session: Effective Learning Strategies (ELS) Poster Session

Abstract

Many accountants begin their professional careers preparing business tax returns. Auditors must review their clients’ tax returns to determine the impact on the financial statement tax provision. Financial accountants and auditors must know how to interpret and to understand a tax return regardless if they are not tax accountants. Thus, it is imperative for accounting students to get exposure to preparing a business tax return.

The Tax Return Preparation Assignment effective learning strategy exposes students to IRS tax forms and instructions, tax law resources and business tax preparation software. Students are provided with a case study involving a small business structured as a limited liability company. The company files a partnership return for federal income tax purposes. The students are provided with the company’s book basis financial statements. The case study also provides the students with the company’s capital additions for the year (including tax depreciation methods), gains/losses from asset sales, revenues from prepaid service contracts, property distributions to members including guaranteed payments, and members’ liability for company debts. The company also receives a Schedule K-1 for its ownership interests in a limited partnership.

The course textbook includes H&R Block business tax preparation software for the students to use to prepare the tax return. However, students are given the option to prepare the return by hand without the aid of the software. The students are instructed on the locations on the Internal Revenue Service website where tax return forms and instructions can be accessed. The students also have access to RIA Checkpoint tax research database so they can research tax authorities if needed. The students are instructed to prepare the following forms and schedules:

• Form 1065, U.S. Return of Partnership Income (pages 1-5).
• Schedule D, Capital Gains and Losses.
• Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc. (for one member only).
• Attachments and supporting schedules.

In summary, participants will learn from the poster presentation a learning strategy that provides accounting students with insight as to how tax accountants prepare business tax returns. The strategy requires students to use technology appropriate to the accounting profession, use tools and resources made available from the IRS, and develop tax research analytical skills.

Author

• Donald Llewellyn Jones, University of Nevada-Las Vegas