Auto Financial, Inc.: Utilizing Tax Incentives to Illustrate the Implementation of Tax Provisions to Business

Abstract

The CEO of Auto Financial Inc. has just learned of a new tax incentive, the Save Taxes by Adding and Retaining (STAR) Act, and she is considering hiring some new employees. As the current controller of Auto Financial Inc., your assignment is to read the relevant portion of STAR and to quantify the value of any tax benefits that Auto Financial, Inc. would receive if the CEO chooses to hire the five new employees. This case requires you to apply a rule of the Internal Revenue Code (IRC) to a practical business situation. As you complete the case you will become more comfortable with reading and interpreting IRC rules and applying them in business settings. You will also become more familiar with common payroll withholding categories and you will gain experience writing tax-related memoranda.