Description
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 by the ability to secure several significant contracts with enough capital.
Instructions
Use the Internet and Strayer Library to 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 as a guide the six-step tax research process in Chapter 1 that was demonstrated in Appendix A on page 7 of your textbook.
Write a 1–2 page letter in which you:
- Compare the tax advantages of debt versus equity capital formation of the corporation for the client.
- Recommend to the client whether he or she should use debt or equity for capital formation of the new corporation, based on your research. Provide a rationale for the response.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
- Create a recommendation for a capital structure approach using an analysis of debt versus equity capital formation.
Explanation & Answer
Attached.
Running head: CLIENT LETTER
1
Acc-565 Client Letter
Student's Name:
Institutional Affiliation:
CLIENT LETTER
2
Fernando Accounting
1233 36th Street North
Melbourne, OK 74106
Jeff Bazar, Chief Financial Officer
Bazar Industries
1234 34th Street North
North Carolina, OK 74106
October 15, 2020
Dear Mr. Bazar:
It is indeed a great pleasure to have the opportunity to address you in reference to your
new corporation, Bazar industries. Following the dire need for numerous ways to ensure
conformity with the Health Insurance Portability and Accountability Act in the medical
profession. I am very exhilarated to see the kind f technology you have incorporated into your
industr...
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