question archive The Carbondale Miners are a minor-league hockey team that operates under the auspices of the Central States Hockey Association
The Carbondale Miners are a minor-league hockey team that operates under the auspices of the Central States Hockey Association
Subject:AccountingPrice: Bought3
The Carbondale Miners are a minor-league hockey team that operates under the auspices of the Central States Hockey Association. The association regulates schedules, player eligibility, and general actions and behavior of league teams and players, based on a comprehensive set of league bylaws, hockey rules, and team charters. During a recent game with a rival team, tempers flared, and a fight broke out on the ice. What originally began as an altercation between players spread to the fans that rushed onto the ice and began fighting with each other and the players. The fans were significantly outmatched by the players. Several fans were severely beaten, suffering multiple lacerations, and in one case, a concussion. Although no criminal actions were brought against individual players, the team was ultimately fined $10,000 by the Carbondale fire marshal for violations of local crowd safety ordinances. When the league became aware of the situation, it levied an additional $20,000 fine against the Miners. The Miners immediately paid both fines without protest. You have been hired to determine whether the fines are deductible. Make sure you consider each of the fines separately. You are expected to do the necessary research to support your decisions. Remember, you work for the client, and it is better for them if they can take the deduction. If it is possible, you need to present a clear and convincing argument that the fines are deductible. If it is not possible, you must clearly explain why the fine is not deductible. 1. You are the accountant for the Miners. a. How should the Miners account for the fines that were levied? How should they be presented in the income statement? (GAAP portion of assignment) b. What are the tax implications to the Miners of the fines? i . Determine whether the fine paid to the Carbondale fire marshal, a city agency, is deductible. You will need to cite the Internal Revenue Code, federal tax regulations, and at least one Supreme Court case to support your answer. ii. Do the research to determine whether the fine paid to the Central States Hockey Association is deductible. A. Demonstrate a clear understanding of the terms ordinary and necessary by providing the IRC, federal tax regulations, and court cases that are used to define them iii. Go through the American Hockey League (https://theahl.com/rules) rule book and use it to create an argument that supports your decision. 2. Independent of the Miners, what are the tax implications to the Central States Hockey Association for the fine paid by the Miners? Assume in this case that the Association is run as a for-profit entity.
