Company Background

Florida Chocolate Inc. was first opened as a sole proprietor in 20×2 under the name Alexandria’s Chocolates. The company produced 4 specialty chocolate products using an old family recipe, which only the owner, Alexandria Vierra, knows. The company started as a small home based business.

In 20×4 Alexandria decided to expand the business, opened a factory in Ft. Lauderdale Florida and converted the business to a corporation named Florida Chocolate Inc. Due to the huge success of the business she decided to expand to Europe in 20×6, opening another factory in England. This factory is run by Alexandria’s brother Nelson. The third factory was opened in Brazil in 20×9 and is run by Alexandria’s sister Laura.

Project Information:

Alexandria contracted you as her accountant and is seeking advice on switching from a sole proprietorship to a corporation in 20×3.

Portfolio Project Requirements:

This project is split into four (4) parts with one (1) part due each week of the course.

· Part 1 and Part 2 will provide opportunities to receive feedback.

· See Rubric: "Weekly Portfolio Project Rubric"

· Part 3 will encompass all Parts 1-3.

· See Rubric: "Portfolio Project Rubric"

· Part 4 will require a presentation of Part 1-3, including any additional requirements as indicated.

· See Rubric: "Presentation Rubric"

Based on your readings, use of technology, research of literature, and other sources complete the following: 

Part 1:

This week's assignment will be a draft of Part 1 of the portfolio project. The final version of Part 1 of the project is due, along with Part 2, in their final versions, with Part 3 as the Portfolio Project for this class.

Please prepare a minimum 2 page memo on the below to your client.

· Describe the four different legal entities recognized by the US tax system and the fundamental differences in the characteristics across business entities.

· Include the pros and cons of transitioning from a sole proprietorship to a corporation.

· Based on the readings, choose several topics that you would like to explain to your client to pinpoint the advantages or disadvantages of switching from a sole proprietor to a corporation.

· Discuss the principles of ethical and professional conduct relating to corporate, business, and trust taxation supported by standards/practice.

Part 2:

This week's assignment will be a draft of Part 2 of the portfolio project. The final version of Part 2 of the project is due, along with Part 1, in their final versions with Part 3 as the Portfolio Project for this class.

Please use the provided excel template to calculate the below:

Alexandria has also requested that you compute the income tax provision for Florida Chocolate Inc. as of December 31, 20×3. The company’s income statement for 20×3 is provided below:

Florida Chocolate Inc.

Statement of Operations

at December 31, 20×3

Net sales


Cost of sales


Gross profit




Selling expenses


Depreciation and amortization


Other expenses


Total operating expenses


Income from operations


Interest and other income


Income before income taxes

$ 4,525,000

You have identified the following permanent differences:

Interest income from municipal bonds $10,000

Nondeductible stock compensation 5,000

Nondeductible fines 1,000

Florida Chocolate Inc. prepared the following schedule of temporary differences from the beginning of the year to the end of the year:

Florida Chocolate Inc.

Temporary Difference Scheduling Template










Temporary Differences





Accumulated depreciation














Temporary Differences





Allowance for bad debts





Prepaid income





Deferred compensation





Accrued pension liabilities










a. Compute Florida Chocolate Inc.’s current income tax expense or benefit for 20×3.

b. Compute Florida Chocolate Inc.’s deferred income tax expense or benefit for 20×3.

c. Prepare a reconciliation of Florida Chocolate Inc.’s total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates.

Part 3:

This week's assignment is to complete Part 3 of the portfolio project and to submit the final versions of Part 1 and Part 2 of the project for a completed Portfolio Project.

Please prepare a hypothetical tax calculation based on the different type of entities given the same amount of taxable income.

· What would the client tax liability look like if the entity was a C Corp, an S Corp, or a sole proprietorship?

· Prepare a hypothetical tax return, using software, as either a C or S Corp based on your determination of which would be better for this client.

Submit the final Portfolio Project (Parts 1 through 3 in their final versions) for grading.

Part 4:

Please prepare a PowerPoint presentation that presents the previous three weeks’ findings as if you were presenting them to the client.

Writing/Presentation Requirements:

· The body of this paper in total should be 7-8 pages (not including cover page, abstract or references) but not more than 9 pages.

· Embed all software charts/tables/diagrams into the paper

· A minimum of 3 scholarly references in total are required from the KU Library, academic journals, professional journals, and/or appropriate authoritative references such as FASB Codification System, COSO, COBIT, Audit Standards, etc.

· Be sure to provide specific examples throughout your paper to back up your statements

· All research papers are submitted in APA format for sources and citations.

· Please remember to run your documents through Plagiarism Check to review the percentage taken from other sources prior to uploading here for final grading and the final plagiarism check.

· Please use the Writing Center as needed

· View the grading rubric

Technology/Collaborative Activity:

· You will be using various software to create the exhibits to your paper

· You will be presenting your findings from the project to the class using the voice-over feature in PowerPoint. Please be sure the audio is clear and the file is in the Week 4 Presentation discussion board.

· You will be collaborating with other classmates on their presentations and answering any questions about your own presentation.

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