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.
After thinking about the information you submitted to me about your taxes, there were several issues which I observed. Firstly, I would like to talk about John Smith's issues: 1(a) I think the $300,000 received by John Smith as fees from jury award is taxable for federal tax income purposes. Because as the IRC Sec 104(a)(2) law: any winnings in a personal injury lawsuit that cover the treatment of physical injuries are not taxable except for attorney fees which are taxable. Taxability also depends upon the place of residence of the taxpayer. (1) In Codman Vs. Commissioner, held that attorney fees paid to the attorney not to be included in the gross income of the claimant in favour of whom the personal injury lawsuit is settled.
c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? The issue is determining how to reduce the taxable income for both the $300,000 and the $25,000 reimbursed expenses that are included in gross income for the current year. Since John did not know if he were going to win the case that he worked on for two years and therefore receive the income, he was unable to use the accrual method and had to use the cash method. In order to reduce his income for the current year, he can file an amendment to his previous tax year to change to use the accrual method. With this method, he can split his income and expenses between two years, effectively reducing his taxable liability for the current year.
Christopher Nelson Intermediate Accounting II Research Case 1 1. As of December 31, 2011, what amount, if any , of sales taxes due should be recognized in eVade’s financial statements? Assuming the financial statements for year ending 12/31/2011 have not been issued, an adjustment to sales tax liability can be recognized for the entire $25,000.000. As well, affected prior period statements will need to be re-stated. This is consistent with FASB codification ASC250-10-45-23 2.
If she were to move to another state where her marginal state rate would be 10 percent, would her choice be any different? Assume that Dana itemizes deductions. When the state rate is 5 percent, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond yields $1,125 or $30,000 x [.05 x (1-.25)] after tax. The corporate bond yields $1,282.50 or $30,000 x [.06 x (1 - .25 - .05(1-.25))] after tax. Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
Line 17—Disposition of exercised the option is not taxable for the excess, if any, of: Property the regular tax. His regular tax basis in 1. The fair market value of the stock the stock at the end of 2009 is $20,000. Your AMT gain or loss from the For the AMT, however, Ash must acquired through exercise of the option disposition of property may be different include the $180,000 as an adjustment (determined without regard to any lapse from your gain or loss for the regular on his 2009 Form 6251. His AMT basis restriction) when your rights in the tax.
His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is
H&R Block This case is a federal class action suit against H&R Block. H&R Block offers refund anticipation loans (RALS) a RAL is a short term loan that is funded either the day the client does their federal tax return or the next day this loan is given out at a substantial interest rate for someone that is entitled to a refund on their federal tax return. Block also offers refund anticipation checks (RACS) as part of their tax services. The RAC is when you don’t have the money to pay for your tax services. H&R Block will charge a convenience fee to take the tax preparation fee out of the person’s tax refund.
25) Investment interest expense which is disallowed because it exceeds the taxpayer’s net investment income may be carried over and treated as incurred in subsequent years. 26) Investment interest includes interest expense incurred to purchase tax-exempt securities. 27) Taxpayers may elect to include net capital gain as part of investment income. 28) Taxpayers may not deduct interest expense on personal debt including credit card debt, car loans, and other consumer debt. 29) Qualified residence interest consists of both acquisition indebtedness and home equity interest.
c. After purchasing a personal residence, Paul probably will no longer claim the standard deduction on the income tax return. Due to mortgage interest and property tax deductions he will itemize his deductions on Schedule A. 5. For wage earners, the tax system requires employers to withhold for taxes a specified portion of an employee’s wages. Persons with income form other than wages have to make quarterly payments to the IRS for estimated taxes due for the year.