...These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 11/15/2014 | Time Spent: | 3 h , 17 min , 15 secs | Points Received: | 75 / 75 (100%) | | Question Type: | # Of Questions: | # Correct: | Multiple Choice | 8 | 8 | Essay | 2 | N/A | | | Grade Details - All Questions | Question 1. | Question : | (TCO B) In which of the following situations may taxpayers file as married filing jointly? (Becker CPA Review Course) | | | Student Answer: | | Taxpayers who were married but lived apart during the year. | | | | Taxpayers who were married but lived under a legal separation agreement at the end of the year. | | | | Taxpayers who were divorced during the year. | | | | Taxpayers who were legally separated but lived together for the entire year. | | Instructor Explanation: | RULE: In order to file a joint return, the parties must be MARRIED at the end of the year. Exception: If the parties are married but are LEGALLY SEPARATED under the laws of the state in which they reside, they cannot file a joint return (they will file either under the single or head of household filing status). Choice "a" is correct. Per the above rule, taxpayers who are married but lived apart during the year are allowed to file a joint return for the year. The fact that they did not live together during the year has no bearing on...
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...Exam #3 ACNT 1331 Spring 2012 | | 1. Terry Trumbull purchased a tract of land. In order to have city water, he had to pay the water company $5,000 to extend the water line to his property. The $5,000 cost is an addition to the basis of the land. a. True b. False Answer: _____ 2. The basis for nonbusiness property changed to business use is the greater of the adjusted basis of the property or its fair market value on the date it is converted to business use. a. True b. False Answer: _____ 3. David Dawson owned two shares of a corporation's common stock. He paid $60 for one share and $30 for the other share. The corporation declared a stock dividend which gave stockholders two new shares of common stock for each share they held. After the distribution, David owns six shares of stock with an adjusted basis of $15 each. a. True b. False Answer: _____ 4. For purposes of the related party rules, the taxpayer's parents are "related persons," but the taxpayer's siblings (brothers and sisters) are not. a. True b. False Answer: _____ 5. The wash sale rules merely postpone the loss until the taxpayer sells the securities in a nonwash sale transaction. a. True b. False Answer: _____ 6. Leonard Lambert's commercial building, which had an adjusted basis of $500,000, was partially destroyed by fire. The fair market value was $800,000 just before the fire and $600,000 immediately after. Leonard received $150,000 insurance proceeds and deducted...
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...Federal Income Tax I Self Employed Income Bella Bonita is self-employed as a hair stylist. She works at Fancy’s Inc., where she rents a station. On Saturdays, she works at Fancy’s in the morning and then drives to the senior center to do hair for the residents. Bella is a cash-basis taxpayer who materially participates in the operation of her business. Bella did not make any payments that would require her to file Form 1099. She received Form 1099-MISC for $7,800 from Fancy’s, and had an additional $3,000 cash income in tips and payments from the senior center. She has a written mileage log showing 4,024 miles for 2014: – 3,514 miles from home to work and return each day – 510 miles from Fancy’s to the senior center The total mileage on her car for 2014 was 11,000 miles. She placed her car in service on May 6, 2010. She always takes the standard mileage rate. This is Bella’s only car and it was available for personal use. Bella has records for other expenses relating to her business: – Hair stylist’s station rental: $2,400 – Supplies: $1,000 – Car repairs: $475 – Business liability insurance: $450 – Tolls and parking paid on the way to the senior center: $60 – Business license: $50 – Meals with owner of Fancy’s to negotiate a business: $204 – Daily meals for self: $875 For line 13 on Schedule C use $450. The following information will be used for the next assignment. Bella also has been depreciating her hair equipment which she purchased on...
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...Part 1 Calculation Taxable income=Pre-tax net income+Fines & Penalties+Allowance for bad debts-Tax-exempt income-Depreciation=652,000+6,000+15,000-3,000-4,500=665,500 Current tax expense=Taxable income*Tax rate=665,500*34%=226,270 Beginning of year balance: Total DTA=Beginning-of-year warranty reserve*Tax rate=40,000*34%=13,600 Total DTL=Beginning-of-year depreciation*Tax rate=10,000*34%=3,400 Net total DTA/DTL=Total DTA-Total DTL=13,600-3,400=10,200 End of year balance: Total DTA=End-of-year warranty reserve*Tax rate+End-of-year Allowance for bad debts*Tax rate=(Beginning-of-year warranty reserve+Current year warranty reserve difference)*Tax rate+(Beginning-of-year allowance for bad debts+Current year allowance for bad debts difference)*Tax rate=(40,000+0)*34%+(0+15,000)*34%=18,700 Total DTL=End-of-year depreciation*Tax rate=(Beginning-of-year depreciation+Current year depreciation difference)*Tax rate=(10,000+4,500)*34%=4,930 Net total DTA/DTL=Total DTA-Total DTL=18,700-4,930=13,770 Deferred income tax expense/(benefit): Warranty reserve expense=End-of-year warranty reserve-Beginning-of-year warranty reserve=13,600-13,600=0 Allowance for bad debts expense=End-of-year Allowance for bad debts-Beginning-of-year Allowance for bad debts=5,100-0=5,100 Depreciation benefit=End-of-year depreciation-Beginning-of-year depreciation=4,930-3,400=1,530 Deferred income tax expense=Warranty reserve expense+Allowance for bad debts expense-Depreciation...
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...17-26.In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has significant income from other sources and is in the 39.6% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. a. Azure is a C corporation and pays no dividends or salary to Sasha. b. Azure is a C corporation and distributes $75,000 of dividends to Sasha. c. Azure is a C corporation and pays $75,000 of salary to Sasha. d. Azure is a sole proprietorship, and Sasha withdraws $0. e. Azure is a sole proprietorship, and Sasha withdraws $75,000. 17-28. Benton Company (BC) has one owner, who is in the 33% Federal income tax bracket. BC’s gross income is $395,000, and its ordinary trade or business deductions are $245,000. Compute the Federal income tax liability on BC’s income for the current year under the following assumptions: a. BC is operated as a proprietorship, and the owner withdraws $100,000 for personal use. b. BC is operated as a corporation, pays out $100,000 as salary, and pays no dividends to its shareholder. c. BC is operated as a corporation and pays out no salary or dividends to its shareholder. d. BC is operated as a corporation, pays out $100,000 as salary to its shareholder, and pays out the remainder...
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...17-26.In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has significant income from other sources and is in the 39.6% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. a. Azure is a C corporation and pays no dividends or salary to Sasha. b. Azure is a C corporation and distributes $75,000 of dividends to Sasha. c. Azure is a C corporation and pays $75,000 of salary to Sasha. d. Azure is a sole proprietorship, and Sasha withdraws $0. e. Azure is a sole proprietorship, and Sasha withdraws $75,000. 17-28. Benton Company (BC) has one owner, who is in the 33% Federal income tax bracket. BC’s gross income is $395,000, and its ordinary trade or business deductions are $245,000. Compute the Federal income tax liability on BC’s income for the current year under the following assumptions: a. BC is operated as a proprietorship, and the owner withdraws $100,000 for personal use. b. BC is operated as a corporation, pays out $100,000 as salary, and pays no dividends to its shareholder. c. BC is operated as a corporation and pays out no salary or dividends to its shareholder. d. BC is operated as a corporation, pays out $100,000 as salary to its shareholder, and pays out the remainder...
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...Federal Estate Tax Introduction Federal estate taxes have been a heavily debated topic since the law was introduced in 1916. The IRS defines estate taxes as “a tax on your right to transfer property at your death.” A History of the Tax Estate taxes trace back to as early as 700 B.C. Historians believe there was a 10% tax in Egypt on the transfer of property upon death. In the United States, the tradition of taxing assets after death was used on and off from 1797 to fund wars. The first federal estate tax law was passed under the Stamp Act of 1797 to fund an undeclared naval war on France. It was repealed 5 years later, and another law was not passed requiring the tax until the Tax Act of 1862. This particular act was enacted to help finance the Civil War and was repealed in 1870. Two important Supreme Court cases set the stage for the estate taxes Americans face today. First, in 1874 a citizen argued estate taxes are unconstitutional because they are a direct tax and under the Constitution, must be allocated among the states according to population. The Supreme Court disagreed arguing direct taxes tax land, houses and other permanent real estate. 2 The second case didn’t directly involve the issue of estate taxes, but instead challenged the legality of the Income Tax Act of 1894. However, this lawsuit indirectly affected estate tax laws because it included gifts and inheritances subject to income tax. “The Supreme Court struck down the whole bill because the tax...
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...Tax deductions are related to the legislative grace and the ability-to-pay concept. 2 Restrictions: 1. Only deductions allowed by the tax law may be subtracted to compute taxable income. Congress allows deductions for the costs of earning income and certain expenditures. 2. A deduction is allowed for an item only if all requirements are satisfied. Business Expense: the expense must have a business purpose that is unrelated to its tax effect. Gross Income: Only the excess of an individual’s capital investement. The deduction for an item may not exceed the cost. Basis: The cost of an asset or an expense. Represents the max amt of an expenditure that can be deducted as a recovery of capital. Trade or business expenses are deducted FOR adjusted gross income (always) Production-of-income expenses are deducted FROM adjusted gross income-Does not apply to Corportations (deduction is reduced by 2% agi. If agi is 40,000 (6%=$800) and exp is $6000, amt of deduction is $5200) Conduit Entity: Investment expenses of individuals & miscellaneous itemized deductions must be reduced by 2% of agi. Most common deductions that must be reported separately -Charitable contributions - Investment interest expense -Investment expense -Section 179 expense -Nondeductible expenses TRADE OR BUSINESS EXPENSES • Sec 162, “ all the ordinary and necessary expenses…including salaries & compensation, traveling expenses (including meals & lodging), and rentals or other payments required)...
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...Homework 2 1. Rachel is a limited partner in Starship Partners. This year Starship reported that Rachel's share of dividend income was $3,700 and his share of municipal interest was $2,750. Early this year Rachel found a bundle of $100 bills in the alley outside his apartment. When no one claimed the money, the cash (a total of $2,400) was returned to Rachel. Finally, Rachel earned salary of $42,000 but almost $6,500 was withheld for income taxes and FICA tax. Compute Rachel's (a) realized income and (b) gross income. BE SURE TO CALCULATE BOTH AMOUNTS. a) 3,700 + 2,750 + 2,400 + 42,000 = $50,850 b) 3,700 + 2,400 + 42,000 = $48,100 2. Ted works as a painter for local businesses on weekends, and he often provides services in exchange for property. This year Ted provided painting services in exchange for $1,275 of car repair services, $3,570 of groceries, and a certificate of deposit (CD) for $4,050. The (CD) matures next year with interest. Finally, Ted received a gift card that can only be applied for $850 of clothing at a local mall. Ted has only applied the gift card to purchase $100 of clothing. Compute Ted's gross income assuming that he uses the cash basis of accounting. 1,275 + 3,570 + 4,050 + 850 = $9,745 3. Jennifer was married on November 1 of this year and on that day received numerous gifts from her extended family. Her grandfather presented Jennifer with a check for $15,000; her uncle gave Jennifer 1,000 shares of Ford stock worth $10 per share (the uncle purchased...
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...OVERVIEW OF FEDERAL TAX PROVISIONS AND ANALYSIS OF SELECTED ISSUES RELATING TO NATIVE AMERICAN TRIBES AND THEIR MEMBERS Scheduled for a Public Hearing Before the SENATE COMMITTEE ON FINANCE on May 15, 2012 Prepared by the Staff of the JOINT COMMITTEE ON TAXATION May 14, 2012 JCX-40-12 CONTENTS Page INTRODUCTION AND SUMMARY I. 1 GENERAL RULES REGARDING THE TAXATION OF INDIAN TRIBES AND TRIBAL MEMBERS AND THE TAXING POWERS OF INDIAN TRIBES ................. 3 A. Income Taxation of Indian Tribes and Wholly Owned Tribal Corporations................ 3 1. Federal income taxation of Indian tribes and wholly owned tribal corporations ... 3 2. State taxation of Indian tribes ................................................................................. 4 B. Tax Treatment of Enrolled Members of Indian Tribes ................................................. 7 1. Federal tax............................................................................................................... 7 2. State tax................................................................................................................... 7 C. Taxing Powers of Indian Tribes .................................................................................... 9 D. Alaska Native Settlement Trusts................................................................................. 10 II. SELECTED FEDERAL TAX RULES AND ISSUES RELATING TO INDIAN TRIBES AND THEIR MEMBERS ............
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...ACA1 Task 2 Write an essay in which you recommend the most advantageous tax filing status for Spouse A and Spouse B on their federal tax return. The filing statuses available to the taxpayer couple are married filing jointly, and married filing separately. The best filing status for Spouse A and B is married; filing jointly. Both spouse A and B have separate income for the year and so could file separate returns but they would also have to file at a higher tax rate schedule because their income is not combined. They would be required to claim any exemptions, deductions, and credits available separately. The couple is also precluded from filing a dependent twice so if A were to file for one of their 3 dependents then B could not claim the same dependent. The couple will qualify for 5 exemptions if filing together: 1 for spouse A, 1 for spouse B, 2 for the minor children, and 1 for the student adult child. Spouse B’s mother (whom lives with the couple) receives social security benefits in the amount of $750 per month she contributes all but $90 a month to the household. Since this amounts to $7920 and the couple contributed $7000 to the mother, they provided less than half of her support and so cannot claim her as an exemption. (Hoffman, et al, 2011). When addressing taxable and non-taxable income, it is mandatory that all income be reported on the return but only the portions subject to tax will be tax assessed. Spouse A has a K-1 from the partnership which shows $142,000 of...
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...Many people make an assumption that federal income tax cuts mean additional finances in their pockets. Over the years, experts have noted that this is a political strategy to entice voters, and was heavily used during the 2012 election cycle. During that year, individuals had many differences between parties’ positions. Republican Governor and presidential aspirant Mitt Romney observed that the 2011 tax rates at times referred to as ‘Bush tax cuts’ be reduced and extended with an additional of 20% with the topmost rate diminishing from 35% to 28%. On the other hand, Democrat presidential candidate and the incumbent leader of the United States advocated for an increase in tax gains from 35% to 39.6% for taxable income higher than $388,350 (Romney1377). The leader of the world’s most powerful nation also stated advocated for an rise in capital gains tax then at 15% to...
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...citizen or resident. C Corp can have multiple classes of stock while S Corp are limited to one class of stock. 21-13. What limits are placed on the selection of a tax year of an S corporation? How do these limits differ from those applicable to C corporations and partnerships? Generally, an S corporation or partnership must use a required tax year under the Internal Revenue Code. An S corporation must use a calendar year unless it obtains approval from the IRS. Other permitted tax years are one elected under section 444, a 52 -53 tax year ending with reference to a calendar year or section 444 tax year, or other tax year for which the company established business purpose. A partnership's required tax year is one which generally conforms to the partners' tax years unless it makes a section 444 election, can establish a different tax year for a business purpose, or elects a 52 -53 tax year ending with reference to a calendar or section 444 tax year. A C corporation may use either a calendar year or a fiscal year. A fiscal year is 12 consecutive months ending on the last day of any month except December. A 52 - 53 week fiscal tax year is one that varies from 52 to 53 weeks but may not end on the last day of the month. http://www.justanswer.com/tax/0zdnh-limits-placed-selection-tax-year.html#ixzz1aKuQWerx 21-26. Durra business is organized as a regular C corporation in 1986. At the beginning of the present year, Durra business elects to be...
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...ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes.com/downloads/acc-401-federal-income-tax-final-paper/ For More Tutorial Visit: http://homeworktimes.com/ For any Information Email Us: : onlineeducationalservice@gmail.com ACC 401 Federal Income Tax Final Paper http://homeworktimes...
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...ACCT 324 Federal Tax Accounting I Entire Course http://www.devryguiders.com/downloads/acct-324-federal-tax-accounting-i-entire-course/ ACCT 324 Week 1 DQ 1 ACCT 324 Week 1 DQ 2 ACCT 324 Week 1 Quiz – Federal Tax Law and Process ACCT 324 Week 2 DQ 1 ACCT 324 Week 2 DQ 2 ACCT 324 Week 2 Quiz – Income Inclusions, Exclusions & Accounting Methods ACCT 324 Week 2 You Decide ACCT 324 Week 3 Course Project: Deductions, Losses & Depreciation ACCT 324 Week 3 DQ 1 ACCT 324 Week 3 DQ 2 ACCT 324 Week 3 Quiz – Deductions, Losses & Depreciation ACCT 324 Week 4 DQ 1 ACCT 324 Week 4 DQ 2 ACCT 324 Week 4 Midterm Exam – Deductions, Losses & Passive Activities ACCT 324 Week 5 Course Project ACCT 324 Week 5 DQ 1 ACCT 324 Week 5 DQ 2 ACCT 324 Week 5 Quiz – AMT, Tax Credits, & Tax Payments ACCT 324 Week 6 DQ 1 ACCT 324 Week 6 DQ 2 ACCT 324 Week 6 Quiz – Property Transactions ACCT 324 Week 7 DQ 1 ACCT 324 Week 7 DQ 2 ACCT 324 Week 7 Quiz – Capital Gains & Losses ACCT 324 Week 8 Final Exam ACCT 324 Federal Tax Accounting I Entire Course http://www.devryguiders.com/downloads/acct-324-federal-tax-accounting-i-entire-course/ ACCT 324 Week 1 DQ 1 ACCT 324 Week 1 DQ 2 ACCT 324 Week 1 Quiz – Federal Tax Law and Process ACCT 324 Week 2 DQ 1 ACCT 324 Week 2 DQ 2 ACCT 324 Week 2 Quiz – Income Inclusions, Exclusions & Accounting Methods ACCT 324 Week 2 You Decide ACCT 324 Week 3 Course Project: Deductions, Losses & Depreciation ACCT 324 Week 3 DQ 1 ACCT 324 Week 3 DQ 2 ...
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