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

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

Taxation

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?

Tax Problem

HOPE Scholarship Credit and Lifetime Learning Credit. John and Mary, a married couple who file a joint return, have two dependent children in college, Jeff and Brooke. Jeff attends Pepper College, a private, liberal arts college, and Brooke attends State U. During the calendar year 2006, Jeff was a sophomore during the Spring ...continues

Tax Saving Strategy

1. Allan and Sarah are not married. Sarah has a low income but Allan has a high income. a. How might a loan from Sarah to Allan be advantageous to them? b. How might it be advantageous for Allan to rent something from Sarah? 2. Allan and Sarah are married. Allan passes away and Sarah is the sole beneficiary of Allan' ...continues

Partnership Basis in Land

Betty's basis in her partnership interest is $90,000 and she receives distributions of $35,000 cash and inventory (basis to the partnership of $22,000 and a fair market value of $28,000). No land is distributed. (A) How much gain or loss, if any, must Betty recognize as a result of the distribution. (B) What basis will Betty ...continues