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Managerial Accounting Project

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1. (TCOs 1 and 2) Discuss the differences between federal court and the United States Tax Court for litigating tax issues. (Points : 20) |

Question 2.2. (TCOs 1, 2, 3, and 5) During the year, Marcus had the following transactions: Long-term loss on the sale of business use equipment: | $6,000 | Long-term loss on the sale of personal use camper: | $2,000 | Long-term gain on the sale of personal use boat: | $1,000 | Short-term loss on the sale of stock investment: | $3,000 | Long-term loss on the sale of land investment: | $4,000 |

How are these transactions handled for income tax purposes? Explain your answer. (Points : 20) |

Question 3.3. (TCOs 4 and 5) Gladys owns a retail hardware store in Tangipahoa. She is considering opening a business in Hammond, a community located 25 miles away. She incurs expenses of $60,000 in 2011 in investigating the feasibility and desirability of doing so. What amount can Gladys deduct in 2011 if the business is I. another retail hardware store which she opens in December 2011? II. another retail hardware store which she decides against opening? III. a video rental store which she opens in December 2011? IV. video rental store which she decides against opening? (Points : 20) |

Question 4.4. (TCOs 4 and 5) In 2011, Jean earns a salary of $150,000 and invests $20,000 for a 20% interest in a partnership not subject to the passive loss rules. Through the use of $400,000 of nonrecourse financing, the partnership acquires assets worth $500,000. The activity produces a loss of $75,000, of which Jean's share is $15,000. In 2012, Jean's share of the loss from the partnership is $7,500. How much of the loss from the partnership can Jean deduct? (Points : 20) |

Question 5.5. (TCO 7) Rustin bought used, 7-year class property on May 15, 2011,

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