Questions from Federal Taxation

Q: Leonard’s home was damaged by a fire. He also had to

Leonard’s home was damaged by a fire. He also had to be absent from work for several days to make his home habitable. Leonard’s employer paid Leonard his regular salary, $2,500, while he was absent fr...

Q: Dolly is a college student who works as a part-time

Dolly is a college student who works as a part-time server in a restaurant. Her usual tip is 20% of the price of the meal. A customer ordered a piece of pie and said that he would appreciate prompt se...

Q: Lime Finance Company requires its customers to purchase a credit life insurance

Lime Finance Company requires its customers to purchase a credit life insurance policy associated with the loans it makes. Lime is the beneficiary of the policy to the extent of the remaining balance...

Q: Billy fell off a bar stool and hurt his back. As

Billy fell off a bar stool and hurt his back. As a result, he was unable to work for three months. He sued the bar owner and collected $100,000 for the physical injury and $50,000 for the loss of inco...

Q: Sophia lives several blocks from her parents in the same residential subdivision

Sophia lives several blocks from her parents in the same residential subdivision. Sophia is surprised to learn that her ad valorem property taxes for the year were raised, while those of her parents w...

Q: Wes was a major league baseball pitcher who earned $10 million

Wes was a major league baseball pitcher who earned $10 million for his 20 wins this year. Sam was also a major league baseball pitcher before a careerending injury caused by a negligent driver. Sam su...

Q: Casey is in the 15% marginal tax bracket, and Jean

Casey is in the 15% marginal tax bracket, and Jean is in the 35% marginal tax bracket. Their employer is experiencing financial difficulties and cannot continue to pay for the company’s health insuran...

Q: What is the difference between a cafeteria plan and an employee flexible

What is the difference between a cafeteria plan and an employee flexible spending plan?

Q: Ted works for Azure Motors, an automobile dealership. All employees

Ted works for Azure Motors, an automobile dealership. All employees can buy a car at the company’s cost plus 2%. The company does not charge employees the $300 dealer preparation fee that nonemployees...

Q: Eagle Life Insurance Company pays its employees $.30 per mile for

Eagle Life Insurance Company pays its employees $.30 per mile for driving their personal automobiles to and from work. The company reimburses each employee who rides the bus $100 a month for the cost...