Assignment 1: Client Letter
Imagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on
the most advantageous capital structure of a new corporation. Your client formed the corporation in
question to provide technology to the medical profession to facilitate compliance with the Health
Insurance Portability and Accountability Act (HIPAA). Your client is very excited because of the ability to
secure several significant contracts with enough capital.
Use the Internet and research the advantages and disadvantages of debt for capital formation versus
equity for capital formation of a corporation. Prepare a formal letter to the client using the six step tax
research process in Chapter 1 that was demonstrated in Appendix A on page 7 of your textbook as a
Write a one (1) page letter in which you:
Compare the tax advantages of debt versus equity capital formation of the corporation for
Recommend to the client whether he / she should use debt or equity for capital formation of the new
corporation, based on your research. Provide a rationale for the response.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides;
citations and references must follow APA or school-specific format. Check with your professor for any
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the
course title, and the date. The cover page and the reference page are not included in the required
assignment page length.
The specific course learning outcomes associated with this assignment are:
Analyze and research tax issues regarding corporations, partnerships, S corporations, and consolidated
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