Questions from Federal Taxation

Q: Rosa’s employer has instituted a flexible benefits program. Rosa will use

Rosa’s employer has instituted a flexible benefits program. Rosa will use the plan to pay for her daughter’s dental expenses and other medical expenses that are not covered by health insurance. Rosa i...

Q: Jarret owns City of Charleston bonds with an adjusted basis of $

Jarret owns City of Charleston bonds with an adjusted basis of $190,000. During the year, he receives interest payments of $3,800. Jarret partially financed the purchase of the bonds by borrowing $100...

Q: Michael earned $20,000 at the K-M Resort

Michael earned $20,000 at the K-M Resort Golf Club during the summer prior to his senior year in college. He wants to make a contribution to a traditional IRA, but the amount is dependent on whether i...

Q: After his first business trip to a major city, Herman is

After his first business trip to a major city, Herman is alarmed when he reviews his credit card receipts. Both the hotel bill and the car rental charge are in excess of the price he was quoted. Was H...

Q: Nanette is a first-grade teacher. Potential deductions are charitable

Nanette is a first-grade teacher. Potential deductions are charitable contributions of $800, personal property taxes on her car of $240, and various supplies purchased for use in her classroom of $225...

Q: Boston Clothing Limited was a private company that experienced cash flow difficulties

Boston Clothing Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per s...

Q: What is the “actually paid” requirement for the deduction of

What is the “actually paid” requirement for the deduction of an expense by a cash basis taxpayer? Does actual payment ensure a deduction? Explain.

Q: Aubry, a cash basis and calendar year taxpayer, decides to

Aubry, a cash basis and calendar year taxpayer, decides to reduce his taxable income for 2017 by buying $65,000 worth of supplies for his business on December 27, 2017. The supplies will be used up in...

Q: Ted, an agent for an airline manufacturer, is negotiating a

Ted, an agent for an airline manufacturer, is negotiating a sale with a representative of the U.S. government and with a representative of a developing country. Ted’s company has sufficient capacity t...

Q: Linda operates an illegal gambling operation. Which of the following expenses

Linda operates an illegal gambling operation. Which of the following expenses that she incurs can reduce taxable income? a. Bribes paid to city employees. b. Salaries to employees. c. Security cameras...