JIM currently uses the calendar year as its financial and tax annual accounting period. Management, because of the seasonality of sales, wants to change to a fiscal year beginning April 1st through March 31st. You have been asked to review the tax law criteria for making this change.

• Write a memo to your CFO:
  • indicating the outcome of such a change on current taxes, and
  • outlining the requirements for making this change. Evaluate the impact of managerial decisions on the tax liability of the firm. 1500 to 2000 WordsJefferson Industrial Machine (JIM) is incorporated in the United States as a subchapter C corporation. JIM owns a wide variety of manufacturing companies that make industrial machinery in the U.K. and the United States. You are JIM’s corporate tax and financial analyst. Your responsibilities include the following:
    • providing the tax related information for the JIM’s consolidated financial statements
    • analyzing business strategies from a tax perspective and advising management of the tax implication of their strategic decisions for both the short-term and long-term
    • the handling of all of the day-to-day tax related issues, liabilities, and payments, including employee compensation, benefits, and pensions

    JIM uses a hybrid accounting method, which in this case includes accrual for gross profit and cost of goods sold and cash for all other income and expenses. JIM’s strategy is to grow the company through internal growth and acquisitions. Currently, JIM is looking at a vertical integration strategy that would lower the cost of currently purchased component parts. Mason Machining, Inc. is currently a supplier to JIM. It is a U.S. subchapter S corporation that manufactures component parts used in industrial machinery. Mason Machining, Inc. is a closely held family S corporation. JIM is offering the family $750,000 plus $800,000 in common stock to acquire all the assets of Mason. You are a member of JIM’s acquisition team assigned to review the tax implications of the acquisition. Click below to view Mason’s acquisition data that has been put together based on Mason’s 2007 and 2008 actual performance.