the expense is actually incurred. None of the above 4. (TCO A) Which of the following constitutes tax evasion? (Points : 5) Arranging your affairs to keep your tax liability as low as possible under the tax law Avoiding taxes Failing to disclose a tax liability from a completed transaction Trying to minimize your tax liability 5. (TCO C) Which of the following items is subject to federal income tax?
For the regular tax, Ash has in the same year, the tax treatment adjustment related to (3) above. Then, a long-term capital gain of $50,000 under the regular tax and the AMT is refigure Form 4684, Form 4797, and ($60,000 minus his regular tax basis of the same, and no adjustment is Schedule D for the AMT, if applicable, $10,000). For the AMT, Ash has a required. by taking into account any adjustments long-term capital loss of $40,000 Increase your AMT basis in any you made this year or in previous years ($60,000 minus his AMT basis of stock acquired through the exercise of that affect your basis or otherwise result $100,000). an ISO by the amount of the in a different amount for the AMT.
Week 3 Questions: 7: Active income is derived from the main course of business or trade; the taxpayer’s full time job or main means of generating income. Passive income is income derived from passive activities, activities that the taxpayer does not devote sufficient time for to be considered as part of main trade and business activities. Portfolio income comes from dividends, annuities, and other investments not part of the main course of business activities. 13. Material participation is a concept used by the law to determine what qualifies as a passive activity.
In February 2011, the case is settled, and Joe refunds $2,500 to the customer. When Joe prepares his 2010 tax return in April 2011, he will include only $1,500 of net revenues from that customer. Your Answer: False The claim of right doctrine requires the recipient of disputed funds to recognize the income. Joe will include the full $4,000 in his 2010 taxable income because he had full control over the funds. He will be allowed to take a deduction on his 2011 tax return for the $2,500 repaid the customer.
Homework Week 3 7. Differentiate between the following: active income, passive income, and portfolio income. Active income( which is interchangable with earned income) comes from direct efforts of the taxpayer. Examples is wages, salaries, and commissions. Passive Income is income that is earned through a trade or investments where the taxpayer does not spend much time or effort.
He is claimed as a dependant on other tax return, so we cannot deduct him as an exemption. So, $3000-$5700=-$2700, which is less than zero, so his taxable income is $0. 13-55. 2008 $200,000 $50,000 $25,000 25 $ 6,250 ($25,000*($50,000/$200,000)) 2009 $300,000 $81,000 $80,000 27 21,600 ($80,000*($81,000/$300,000)) 2010 $400,000 $96,000 $125,000 24 30,000 ($125,000*($96,000/$400,000)) Total taxable income
When considering how Small Fries Inc and its other facilities should record the costs associated with OSHA compliance on their financial statements as either capitalized as an asset or charged to expenses. We should consider the types of repairs that will be done. Whether they are ordinary repairs or major and extraordinary repairs that will benefit the companies more than one year or operating cycle. According to ASC 360 -10- 25- 5 Planned Major Maintenance Activities, The use of the accrue-in-advance (accrual) method of accounting for planned major maintenance activities is prohibited in annual and interim financial reporting periods. GAAP defines a company's assets as the things it owns or controls that have measurable future economic
Let’s look at contributing the $50,000 in exchange for stocks. According to Smith, Harmelink & Hasselback. Federal Taxation: Comprehensive Topics. CCH, 2013.Pg. 14-18, Code Sec.1032 states that a corporation does not recognize a gain or loss on the receipt of money or other property in exchange for its stock.
The depreciation is based on the car’s life not of the lease agreement. Question # 2 In item #4 we assumed that the $100,000 bond with a 5% rate involves a 15 year-end annual interest payments of $5,000 (100,000*.05). The payments is assumed to be annual, at year end. In appendix B the value of 8% for 15 years is 8.559. so the present value of $5,000 is $42,795, for interest payments $100,000*.315 which is $31,500. In total it will be $74,295; since the investors paid $80,000 the yield rate is less than 8%.
In addition it is considered a non-cash expense since the actual payment could have occurred many years before the expense is calculated. C – Explain the provision for bad debts entry The provision for bad debt takes into account only what is expected to be collected and is not collected and does not include contractual allowance or charity care. Bad debt would include what is expected to be collected (not total charges) less any amount the organization allocates as monies that will never be received even though the payers or patients are contracted or deemed able to pay. The monies organizations allocate that will never be collected is normally generated through a formula based on trended data.