Tax return effects of At-risk and passive loss rules

How do the at-risk rules and passive loss rules can affect a tax return? How is a gain on line 17 of form 1040 can be calculated?

Taxation: involuntary conversion for a condemnation

Tax question: Review and comment on response. 1. Stallings’ personal residence, located in a plush suburban area, is condemned to facilitate the construction of a new freeway artery. Stallings receives a condemnation award of $1,000,000. She uses the award to purchase anew residence for $1,150,000. The adjusted basis of ...continues

Advanced Taxation

1. As marginal tax rates increase, the after-tax cost of a non-deductible expense will A. Increase B. Decrease C. Stay the same 2. A taxable corporation faces a flat 35% marginal tax rate. What is the tax savings from an additional $100,000 deduction? A. $35,000 B. $100,000 C. –0- D. $65,000 3. A taxpayer who th ...continues

Taxation

1) To whom does Circular 230 apply? 2) What are the suggested best practices for tax advisors? 3) Can the IRS penalize practitioners under Circular 230? Explain

Tax savings strategies for a small business

My wife comes to me with the following tax saving strategies: Computer Consulting received $7900 from customers in the last week of December. Can she just hold on to the money and include it in January 2005 receipts? She would like to purchase a car in the name of Computer Consulting. What are his options? She would like ...continues

Property Transaction: Capital gains and losses

Sarah sells short 100 shares of A stock at $20 per share on January 15, 2006. She buys 200 shares of A stock on April 1, 2006, at $25 per share. On May 2, 2006, she closes the short sale by delivering 100 of the shares purchased on April 1. a. What are the amount and nature of Sarah's loss upon closing the short sale? b. Whe ...continues

Explain how Kevin and Janet took advantage of existing IRS rules to reduce taxes

Practically every line of Kevin and Janet’s form 1040 can be used for tax planning. They had total income of $98,771 and paid federal income tax of $6,838 or 7%. Additionally, Kevin had income from his business of $48,040 and paid self-employment tax of $7,001 or 15%. Explain how Kevin and Janet took advantage of existing IR ...continues

Property transactions: Nontaxable exchanges

Sarah owns undeveloped land (basis of $350K) held as an investment. On October 7, 2006, she exchanges the land with her 27-year-old daughter, Ellen for other undeveloped land also to be held as an investment. The appraised value of Ellen's land is $500K. a. On February 15, 2007, Sarah sells the land to Jeff, a real estate ...continues

Property transactions: Nontaxable exchanges - Like kind exchange

Explain how realized and recognized gain or loss for a personal-used asset is assessed. Mike owns a car that he uses exclusively for personal purpose. Its original cost was $26,000, and the fair market value is $12,000. He exchanges the car and $18,000 cash for a new car. a. Calculate his realized and recognized gain or l ...continues

Property transaction: Nontaxable exchanges under Section 121, Sale of personal residences

Meg and Walt are going to be married in three months. Meg has owned and lived in her home for 42 years, and Walt has owned and occupied his home for 35 years. They both have listed their homes for sale. They anticipate the sales results will be as follows: Meg's *Selling price $450K *Selling expenses $40K *Adjusted basis $ ...continues