Business Finance
Arizona State University Mimis Grocery Chain of Stores Inc Tax Memorandum

Arizona State University

Question Description

I’m trying to learn for my Accounting class and I’m stuck. Can you help?

Mimi’s Grocery Chain of Stores, Inc. (“Mimi’s Grocery Chain of Stores”) is a C corporation. Mimi’s

Grocery Chain of Stores is a calendar year taxpayer. Mimi’s Grocery Chain of Stores operates a chain of

grocery stores. Mimi’s Grocery Chain of Stores is very profitable, especially during the pandemic.

However, senior leadership recognizes that many customers in the areas where they operate have lost

their jobs and/or suffered a loss of income. Mimi’s Grocery Chain of Stores has decided to donate food

to local organizations to assist people who are suffering from food scarcity. The local organizations are

tax exempt organizations and are food banks. The food to be donated is all within the expiry dates of

the food items and consist of fresh fruit and vegetables, canned goods (some canned goods my be

dented cans) and baked goods. All the food to be donated would be edible food.

Mimi’s Grocery Chain of Stores would like to understand the amount of the income tax deduction that

may be allowed for these donations (in tax parlance these are often referred to as charitable

contributions). Mimi’s Grocery Chain of Stores has not provided the basis and fair market value of the

goods so you may want to explain the difference where the basis is $100 and FMV is $110 vs basis is

$100 and FMV is $210. You can safely assume the donations for the year will exceed $500,000.

When researching you may want to consider the following (and please note this is not an exhaustive list

just a guide to help you get started):

Unformatted Attachment Preview

TAX MEMO Mimi’s Grocery Chain of Stores, Inc. (“Mimi’s Grocery Chain of Stores”) is a C corporation. Mimi’s Grocery Chain of Stores is a calendar year taxpayer. Mimi’s Grocery Chain of Stores operates a chain of grocery stores. Mimi’s Grocery Chain of Stores is very profitable, especially during the pandemic. However, senior leadership recognizes that many customers in the areas where they operate have lost their jobs and/or suffered a loss of income. Mimi’s Grocery Chain of Stores has decided to donate food to local organizations to assist people who are suffering from food scarcity. The local organizations are tax exempt organizations and are food banks. The food to be donated is all within the expiry dates of the food items and consist of fresh fruit and vegetables, canned goods (some canned goods my be dented cans) and baked goods. All the food to be donated would be edible food. Mimi’s Grocery Chain of Stores would like to understand the amount of the income tax deduction that may be allowed for these donations (in tax parlance these are often referred to as charitable contributions). Mimi’s Grocery Chain of Stores has not provided the basis and fair market value of the goods so you may want to explain the difference where the basis is $100 and FMV is $110 vs basis is $100 and FMV is $210. You can safely assume the donations for the year will exceed $500,000. When researching you may want to consider the following (and please note this is not an exhaustive list just a guide to help you get started): IRC §170(e)(3) Regs. Sec. §1.170-4A Lucky Stores, Inc. 105 T.C. 420 (1995) Your responsibility: Prepare a tax research memo addressing the question that has been raised. Please note that if the tax memo is not in the required format and/or contains very little analysis you will receive a zero (0) for the assignment. All good faith efforts are capable of receiving a minimum of 60% but less than a good faith effort will be awarded zero points. You will need to support your conclusion using primary sources of tax law. Your textbook is NOT primary authority nor are IRS Publications You must use proper citation form in your memo The form for this communication should be professional and in the form of a tax research memo This memo should be whatever length you feel is appropriate to resolve the issues. We do NOT use a TAX MEMO bibliography or list of references in a tax research memo. You will see that citations are within the text of the document in the example. Once a court case has been cited in full, it can be referred to using simply the name in italics. ...
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Final Answer

Attached.

Running head: TAX MEMO

1

Tax Memo
Names
Institution

TAX MEMO

2
Memorandum

To:

Mimi’s Grocery Chain of Stores

From:

[Names]

Date:

September 09, 2020

Subject:

Eligibility for Tax Exemption on Donations

Background
Mimi’s Grocery Chain of Stores, Inc. (“Mimi’s Grocery Chain of Stores”) is a C
corporation. Mimi’s Grocery Chain of Stores is a calendar year taxpayer. Mimi’s Grocery Chain
of Stores operates a chain of grocery stores. Mimi’s Grocery Chain of Stores is very profitable,
especially during the pandemic. However, senior leadership recognizes that many customers in
the areas where they operate have lost their jobs and/or suffered a loss of income. Mimi’s
Grocery Chain of Stores has decided to donate food to local organizations to assist people who
are suffering from food scarcity. The local organizations are tax-exempt organizations and are
food banks. The food to be donated is all within the expiry dates of the food items and consists of
fresh fruit and vegetables, canned goods (some canned goods may be dented cans) and baked
goods. All the food to be donated would be edible food. Mimi’s Grocery Chain of Stores would
like to understand the amount of the income tax deduction that may be allowed for these
donations (in tax parlance these are often referred to as charitable contributions). Mimi’s Grocery
Chai...

Doctor_Ralph (21522)
UT Austin

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