Question

You are a summer intern for Local CPA's, LLC and have been given the following research assignment by the tax partner, John Local. The client is Joe and Beth Parent. They have been funding an Ed IRA (also called a  Coverdell Education Savings Account ) for their son, Eric, for several years. Eric has been offered an academic scholarship at a small, private college in Michigan. The scholarship covers Eric's tuition and fees only; it does not cover books, meals, housing or other incidentals. Eric will not be able to commute to school, but the college does not have any campus-sponsored housing.

What expenses will the Parent's be able to use the Ed IRA for? Write an internal memo to the partner assigning the project to you.

For purposes of grading, you will be graded on:

• grammar and spelling,
• formating and presentation,
• use of appropriate research format (IRAC),
• citation of appropriate legal authority,
• legal analysis (heavy emphasis on analysis), and
• conclusion.

Note: for purposes of this memo, the Tax Cut and Jobs Act of 2017 is not believed to have changed any of the relevant law.

Answer 1

Statement of Funds Requirement

The below stated particulars have been given by taking all aspects into consideration.

The following are the items which are required to be met by Eric's Parents from the Fund

1. Eric's Residential Expenses

2. Books and Meals expenses

3. Others such as Uniform, Extra Curicullar activities