Ahmed Zinna, one of your clients, owns two retall establishments in downtown Charlotte and has come to you seeking advice concerning the tax consequences of complying with the Americans with Disabilities Act. He understands that he needs to install various features at his stores (e.g., ramps, doorways, and restrooms that are accessible) to make them more accessible to disabled individuals. He asks whether any tax credits will be available to help offset the cost of the necessary changes. He estimates the cost of the planned changes to his facilities as follows: Location Calvin Street Stowe Avenue Projected Cost $22,000 8,500 He reminds you that the Calvin Street store was constructed in 2004 and the Stowe Avenue store is.in a building that was constructed in 1947. Ahmed operates his business as a sole proprietorship and has approximately eight employees at each location. Complete the letter to Ahmed in which you summarize your conclusions concerning the tax consequences of his proposed capital improvements.
Ahmed Zinna, one of your clients, owns two retall establishments in downtown Charlotte and has come to you seeking advice concerning the tax consequences of complying with the Americans with Disabilities Act. He understands that he needs to install various features at his stores (e.g., ramps, doorways, and restrooms that are accessible) to make them more accessible to disabled individuals. He asks whether any tax credits will be available to help offset the cost of the necessary changes. He estimates the cost of the planned changes to his facilities as follows: Location Calvin Street Stowe Avenue Projected Cost $22,000 8,500 He reminds you that the Calvin Street store was constructed in 2004 and the Stowe Avenue store is.in a building that was constructed in 1947. Ahmed operates his business as a sole proprietorship and has approximately eight employees at each location. Complete the letter to Ahmed in which you summarize your conclusions concerning the tax consequences of his proposed capital improvements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:September 29, 2022
Mr. Ahmed Zinna
16 Southside Drive
Charlotte, NC 28204
Dear Mr. Zinna:
This letter is in response to your inquiry regarding the tax consequences of the proposed capital improvement projects at your
Calvin Street and Stowe Avenue locations.
As I understand your proposal, you plan to incur certain expenditures that are intended to make your stores more accessible to
disabled individuals in accordance with the Americans with Disabilities Act. The capital improvements you are planning (e.g.,
ramps, doorways, and restrooms that are accessible) qualify for the disabled access credit if the costs are incurred for a facility
that was placed in service before
The projected expenditures of s
location qualify for the credit.
for your Stowe Avenue
% of the eligible expenditures that exceed s
In addition, the credit is calculated at the rate of
but do not exceed s
. You should also
the amount of the
. Thus, the maximum credit in your situation would be s
be aware that the basis for depreciation of these capital improvements would be reduced to s
expenditures reduced by the amount of the disabled access credit. The capital improvements you are planning for your Calvin
Street location, even though they
for the disabled access credit,
be depreciated.
Should you need more information or need to clarify the information in this letler, please call me.
Sincerely,
Kanti Cook, CPA
Partner
Transcribed Image Text:Ahmed Zinna, one of your clients, owns two retall establishments in downtown Charlotte and has come to you seeking advice concerning
the tax consequences of complying with the Americans with Disabilities Act. He understands that he needs to install various features at his
stores (e.g., ramps, doorways, and restrooms that are accessible) to make them more accessible to disabled individuals. He asks whether
any tax credits will be available to help offset the cost of the necessary changes. He estimates the cost of the planned changes to his
facilities as follows:
Location
Calvin Street
Stowe Avenue
Projected Cost
$22,000
8,500
He reminds you that the Calvin Street store was constructed in 2004 and the Stowe Avenue store is in a building that was constructed in
1947. Ahmed operates his business as a sole proprietorship and has approximately eight employees at each location.
Complete the letter to Ahmed in which you summarize your conclusions concerning the tax consequences of his proposed capital
improvements.
SWFT, LLP
5191 Natorp Boulevard
Mason, OH 45040
September 29, 2022
Mr. Ahmed Zinna
16 Southside Drive
Charlotte, NC 28204
Dear Mr. Zinna:
This letter is in response to your inquiry regarding the tax consequences of the proposed capital improvement projects at your
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