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You are the CEO of a successful research and development company in the Midwest that you started from the ground up. You plan to spend $3 million to replace a substantial amount of your factory equipment, and take advantage of additional direct write off depreciation allowed. You also believe in a sustainable environment and have spent considerable capital to make your facility energy efficient, for which you were able to take advantage of energy tax credits. Additionally, your company owns land 10 miles away. You decided to exchange that piece of land for a parcel of land adjacent to your company so that you can expand. Both parcels of land are valued the same and would qualify under the like-kind exchange rules. To promote the financial success of your community, you invest heavily in local municipal bonds and the interest income your business earns from these bonds is exempt from local income taxes. Your business has become a sustainable livelihood for its community and employs over 10,000 local residents and you are allowed to take a business deduction for their wages and benefits paid. You provide robust benefits including health, dental and vision insurance, retirement plan savings, flex spending and on-sight childcare service to maintain their morale and loyalty to your company. You have also established a cafeteria plan to allow your employees to deduct certain medical costs, and dependent care costs pre-tax, thereby saving them money in their paychecks. Unfortunately, your business had late filing penalties and incurred bribes to foreign officials, both of which, are denied a business deduction. You are a big believer in education and provide tuition reimbursement to your employees under certain circumstances, which is not considered income to your employees. You believe in charitable giving and donate to several local charities in support of their charitable missions and are allowed to take a business deduction for the amounts given. Because you proved successful in starting your own company, you provide investment capital for local business ventures to pay forward your business success. Your company sits on the border between two states. Many of your employees live in the neighboring state; both states have the ability to tax your employees by their respective state income tax laws. However, the two states have a reciprocity agreement in place to avoid double taxing your employees.

The scenario above has tax implications for the CEO, the business entity, the employees of the business, and the community. From the scenario above, identify a tax law you feel has impacted the CEO, the business, the employees, the community or any other party not specifically mentioned in the case and explain how this consideration or objective of that law has impacted the behavior, decisions, thoughts, or actions of that party.

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