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
Property transaction: Section 1231 and recapture provisions
Yoshida owns two parcels of business land (Section 1231 assets). One parcel can be sold at a loss of $30K, and the other parcel can be sold at a gain of $40K. Yoshida has no norecaptured Section 1231 losses from prior years. The parcels could be sold at any time because potential purchasers are abundant. Yoshida has a $25K s ...continues
AMT Adjustments and Computation of AMT Tax
Given summary information about Allen’s 2006 income tax return, what is the amount of AMT adjustments related to itemized deductions? What is the AMT liability for 2006? See attached file for full problem description.
Prepaid Expenses and tax deductions for a cash basis taxpayer
Pamello, Inc, an engineering consulting firm, uses the cash method of accounting. Compute the amount of Pamello’s current year deductions for the five transactions. See attached file for full problem description.
Tax Accounting Scenarios: 20 comprehensive corporate, partnership and LLC problems
Chapter 1 1. 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 2. A taxpayer will pay $50,000 at the end of Year 1 and also at the end of Year 2. Given a 5% discount rate, what is the present value of t ...continues
1. Parent Corporation owns 100% of the stock of Subsidiary Corporation, and they file on a consolidated basis. After the “Step 3 computation” of separate taxable income for the year, Parent Corporation had separate taxable income of $250,000 and Subsidiary Corporation had a separate taxable income of $150,000. The only “consolid ...continues
Investment - Call & Put Option and Short Sales
Your client owns a lot of AA stock with a very low cost basis. Your client is worried that the price of AA stock will drop over the next six months, but he doesn't want to sell his AA stock and incur a capital gain. What strategies can he use?
Transferring Land to Corporation - Tax Impacts and security to owner of land
Several entrepreneurs plan to form a corporation for purposes of constructing a housing development. Randall will be contributing the land for the project and wants more security than shareholder status provides. He is contemplating two possibilities: receive corporate bonds for his land, or take out a mortgage on the land b ...continues
Do you think there should be a nationwide internet sales tax as a way of reducing the federal income tax? Why or why not? What are the positives and negatives associated with any type of sales tax?
