Determine Sam and Sally’s taxable income for 2005.
Sam and Sally, his spouse, file a joint return. They have five dependent children. For 2005, they have the following items: Salaries $60,000 Interest income 5,000 Casualty loss (after $100 reduction) 40,000 Other itemized deductions 21,000 a. Determine Sam and Sally’s taxable income for 2005. b. Determine ...continues
Mable and Jack file a joint return
34. Mable and Jack file a joint return. For the current year, they had the following items: Salaries $180,000 Loss on sale of § 1244 stock acquired two years ago 95,000 Gain on sale of § 1244 stock acquired six months ago 12,000 Nonbusiness bad debt 16,000 Determine their AGI for the current yea ...continues
Calculate the salary deduction if Falcon is a cash basis taxpayer.
38. Falcon, Inc., paid salaries of $500,000 to its employees during its first year of operations. At the end of the year, Falcon had unpaid salaries of $45,000. a. Calculate the salary deduction if Falcon is a cash basis taxpayer. b. Calculate the salary deduction if Falcon is an accrual basis taxpayer.
34. Carlton received the following income and incurred and paid the following expenses during the current year: Salary income $72,000 Dividend income 4,000 Interest income 3,000 Contributions to First Church 2,500 Real estate taxes on personal residence 1,800 Alimony paid to former spouse ...continues
Compare and contrast GAAP and income tax accounting. 1. Describe how they are similar and why there are differences. 2. Also, include specific examples of how and when to apply the principles of both types of accounting.
Congress made the decision to tax capital gains at a lower rate than ordinary income. Why do you think they did that?
29. Anne sold her home for $260,000 in 2005. Selling expenses were $15,000. She had purchased it in 1998 for $190,000. During the period of ownership, Anne had done the following: • Deducted $50,500 office-in-home expenses, which included $14,500 in depreciation. • Deducted a casualty loss for residential trees destroyed b ...continues
Calculate Bonnie’s basis for the printer.
32. Bonnie owns a personal computer (adjusted basis of $3,000) that she uses exclusively in her business. Bonnie transfers the computer and cash of $1,500 to Green Computers for a laser printer (worth $5,500) also to be used in her business. a. Calculate Bonnie’s recognized gain or loss on the exchange. b. Calculate Bonnie ...continues
Which ones are capital assets?
13. All of the following assets are held by Chuck, who is not in business. Which ones are capital assets? a. Ten shares of Green Motors common stock. b. A note Chuck received when he loaned $3,000 to a friend. c. Chuck’s personal use automobile. d. A letter written by Abraham Lincoln that Chuck purchased at an auction. Chu ...continues
How much of Ruth’s $5,000 capital loss carries over to 2006?
29. For 2005, Ruth has gross income of $8,300 and a $5,000 long-term capital loss; she claims the standard deduction. Ruth is 35 years old and single with three dependent children. How much of Ruth’s $5,000 capital loss carries over to 2006?
