AC553 You Decide Week 4 John and Jane Smith Tax issues and recommendation 1. John Smith Tax Issues: 1(a) How is the $300,000 treated for purposes of Federal Income Tax? Since the $300,000 was derived from a business activity the amount should be included in the Gross Income reported for the John Smith LLC (IRS Regulation 1.61-3(a)). The assumption is being made that none of the income has been reported previously and that the LLC using a cash basis accounting method (IRS Publication
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You Decide-Week 4 ACCT553 John Smith tax issues: a. How is the $300,000 treated for purposes of federal tax income? Mr. Smith, in regards to your $300,000 earnings for the successful litigation of your clients case, this will be treated as current year earnings. The payment fits all three doctrines of income starting with the economic doctrine which states “all income from whatever source derived” IRC Code Sec. 61 (a). The constructive receipt doctrine, outlining constructive receipt of
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AC553: FINAL EXAM STUDY GUIDELINES The Final Exam will be administered during Week 8. It consists of 16 multiple-choice questions (five points each), totaling 80 points; and 10 essay questions (17 points each) totaling 170 points, for a grand total of 250 points. It is a 3.5-hour exam. There are some basic calculations involved, so a simple calculator may be useful. Showing your work will count towards your overall points, so make sure that your answer consists of more than just numbers. The
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AC553: FINAL EXAM STUDY GUIDELINES The Final Exam will be administered during Week 8. It consists of 16 multiple-choice questions (five points each) totaling 80 points and 10 essay questions (17 points each) totaling 170 points for a grand total of 250 points. It is a 3.5-hour exam. There are some basic calculations involved, so a simple calculator may be useful. Showing your work will count towards your overall points, so make sure that your answer consists of more than just numbers. The Final
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AC553 – You Decide 1. John Tax Issues: a. How is the $300,000 treated for purposes of Federal tax income? The $300,000 is included in John’s Gross Income. Section 61 of the IRS Tax code generally defines gross income as all income from whatever source derived, including the compensation for services, fees, commissions, fringe benefits and similar items. Therefore the $300,000 is classified as compensation John received for legal services rendered. b. How is the $25,000 treated
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