Assignment 1 (from chapter 1)
Ahi Corporation is one of your clients in Hawaii. The companyhad a good year last year and owes the IRS $100 million, due on March 15. Thereare no penalties or interest due to the IRS. One of Ahis employees approachesyou with the following plan to benefit from the so-called float on the largepayment due to the government. First, Ahi Corp. will courier its tax returnpayment to the US Virgin Islands. There, the tax return will be mailed to theIRS service center in Fresno by certified mail on the return’s due date, March15. By doing this, the employee thinks that it will take at least six days forthe tax return to reach the IRS and for them to cash the $100 million check.Ahi can earn 7% after tax on its money, so the interest earned during the sixdays because of the float is $19,178 per day ($100,000,000×0.07/365). Thus, thetotal interest earned on the float for six days would be $115,068. ($19,178 x 6days).
a) Would you recommend Ahi complete this transaction?
b) What potential ethics issues do you see in this situation?
Please write an essay explaining the answers to each questionand your reasoning (properly sourced) for your answer to each question.
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