Louis Vuitton Moët Hennessy (LVMH) is a diversified company with over 70 houses
ID: 360690 • Letter: L
Question
Louis Vuitton Moët Hennessy (LVMH) is a diversified company with over 70 houses or companies. They offer products and services that extend from fashion and leather goods, to perfumes and cosmetics, to watches and jewelry, to specialist retailing, and wines and spirits. One could make the argument that the company’s lines of business, which focus on luxury, qualify it as a related diversifier. See: https://www.lvmh.com/houses/
LVMH opened it upscale Cova Café and Tea Room concept in Asia and later North America. The rationale behind this move is captured by Luca Solca’s observation “Consumers worldwide are expanding their notion of what luxury is, moving beyond products and into experiences. Food is a great way, like travel, to build high quality experiences.” One might argue the move into coffee and tea shops extends beyond the company’s core focus on ultra luxury goods and makes it an unrelated diversifier. Michael Porter’s study of unrelated diversification notes companies making unrelated acquisitions divested 74% of the companies they bought.
Take a quick look at LVMH’s companies and the products and services they offer. Answer two questions.
1) Should LVMH keep the Cova Café and Tea Room chain? It is currently in the “other activities” category and offers no clear synergy. Give a rationale for your decision.
2) If keep, what businesses should it be aligned with? For example, it might be aligned with the wine and spirits or sold or folded into Le Bon Marché Rive Gauche. Give a rationale for your decision.
Explanation / Answer
Ms. Susan Smart,
USA.
Subject: Tax Return for Year 2015.
Dear Madam,
Based on the information provided by you we have made necessary calculations and are hereby attaching you the tax return calculation on your Income for the year 2015.
You have mentioned that you have sold the seld occupied property on July 1, 2015 at $1,100,000. This income is excluded from your income as you owned your home and lived in it for at least 2 years out of the 5-year period leading up to the sale.But in this case you cannot claim the deduction for depreciaition as that was a self occupied preperty for 2015.
The normal calulation tax based on your income is as follows:
It looks like you will owe additional tax in the amount of $8719 based on the data you have submitted.
Also we advise you to filke Form 1040 relating to the income arising from sale o
Filing Status: Single Dependents: 1 Exemptions: 2 Exemption Value: 8000 Income: 70000 Adjustments to Income: 0 Adjusted Gross Income(AGI): 70000 Standard Deduction: 6300 Itemized Deduction: 0 Taxable Income: 55700 Tax: 9719 Credits: 1000 Other Taxes: 0 Payments: 0 Your Tax Bracket: 25% Your Effective Tax Rate: 17%Related Questions
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