Accounting Homework Solutions

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ACCT 323 Week 4 Homework Solutions ACCT 323 Week 4 Homework Solutions 1) In the current tax year, Gunther earned $125,000 from his job as a civil engineer. In addition, he received $30,000 of income from Activity A, and lost $40,000, and 20,000 from Activities B and C respectively. Activities A, B, and C are passive activities that Gunther acquired in the current year. What amount of loss may Gunther deduct on his current year taxes with respect to each activity? What amount of loss, if any, must be carried over to the subsequent year for each activity? 2) During the current year, Beth and Bill, who file a joint return, incurred the following items of income…show more content…
a) What is their AGI for the year? b) What is the amount of suspended losses, if any, that may be carried over with respect to each activity? 3) In the current tax year, Neil’s personal automobile was totaled in a traffic accident. Neil had purchased the automobile two years earlier for $28,000. The FMV of the automobile just prior to the accident was $18,000. The automobile is now worthless. Neil received a $14,000 insurance check in settlement of his accident claim. Later that same year, a thief broke into Neil’s home and took several antiques purchased several years ago for $8,000. Their current FMV at the date of the theft was $12,000. The antiques were not insured. Neil’s AGI for the current year is $60,000. What is the amount of Neil’s deductible casualty loss in the current year? 4) In 2013, Sarah loans Seymour $5,000 for his use in establishing his business. As Seymour has no other assets and needs cash to establish the business, the loan agreement provides that Seymour will repay the $5,000 debt to Sarah with interest at the prevailing rate over a…show more content…
b) Which of the above items are classified as For AGI and From AGI deductions? c) How would your answers to parts (a) and (b) change if Brandy were an employee rather than self-employed and none of the above expenditures were reimbursed by her employer? 7) On February 20, 2015, Charles, who is single and age 32, establishes a traditional deductible IRA and contributes $5,500 to the account. Charles’ AGI is $66,000 in 2014 and $57,000 in 2015. Charles is an active participant in his employer’s retirement plan. a) What amount of the contribution is deductible? In what year is it deductible? b) Is the deduction For AGI or From AGI? c) How would your answer to part (a) change, if at all, if Charles were not an active participant in his employer’s retirement plan? d) How would your answer to part (a) change if Charles were married and filed a joint return with his spouse, who has no earned income, assuming their combined AGI is $85,000? What would be their maximum IRA contribution deduction? 8) Joe and Jean have five grandchildren, ages 19, 16, 15, 12, and 10. The have established Coverdell Education Savings Accounts (CESA) for each of the grandchildren and would like

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