Caravan Traders: A Tax Research Project For Pass-Through Business Entities

Abstract

This paper presents a tax case simulating a real-world experience in the area of partnership or flow-through entity taxation.  Students are presented with an open transaction, hypothetical data and business objectives of the partners.  They are then requested to consider the tax rules and the impact on the parties based upon each of two options in order to determine the best business alternative.  In order to do this, they rely on knowledge learned in the typical partnership taxation course and practice research and analytical skills to synthesize the most optimum outcome.  Students are asked to deliver a tax memorandum that addresses a series of progressive issues, as well as two excels worksheets which outline the tax impact under each of the two options.  As a result of this assignment, students discover the value of prudent and skillful tax planning and the beneficial impact that they can have on the financial affairs of their clients.