Questions from Federal Taxation

Q: Anita, a cash basis taxpayer, sued her former employer for

Anita, a cash basis taxpayer, sued her former employer for wage discrimination. Her attorney agreed to pursue the case on a contingent fee basis—the attorney would receive one-third of any settlement...

Q: Rex became a partner with a 30% interest in the partnership

Rex became a partner with a 30% interest in the partnership profits when he invested $200,000. In 2017, the partnership generated $400,000 of taxable income, and Rex withdrew $100,000. In 2018, the pa...

Q: William and Abigail, who live in San Francisco, have been

William and Abigail, who live in San Francisco, have been experiencing problems with their marriage. They have a 3-year-old daughter, April, who stays with William’s parents during the day because bot...

Q: Patrick and Eva are planning to divorce. Patrick has offered to

Patrick and Eva are planning to divorce. Patrick has offered to pay Eva $12,000 each year until their 11-year-old daughter reaches age 21. Alternatively, Patrick will transfer to Eva common stock that...

Q: In the current year, the Rose Corporation made a $400

In the current year, the Rose Corporation made a $400,000 interest-free loan to John Rose, the corporation’s controlling shareholder. Mr. Rose is also the corporation’s chief executive officer and rec...

Q: Connor purchased an annuity that was to pay him a fixed amount

Connor purchased an annuity that was to pay him a fixed amount each month for the remainder of his life. He began receiving payments in 2001, when he was 65 years old. In 2017, Connor was killed in an...

Q: Compare and contrast the economist’s concept used to recognize income with the

Compare and contrast the economist’s concept used to recognize income with the concept employed in measuring taxable income.

Q: Ben lost his job when his employer moved its plant. During

Ben lost his job when his employer moved its plant. During the year, he collected unemployment benefits for three months, a total of $1,800. While he was waiting to hear from prospective employers, he...

Q: Sally Andrews calls you on the phone. She says that she

Sally Andrews calls you on the phone. She says that she has found a 2007 letter ruling that agrees with a position she wants to take on her tax return. She asks you about the precedential value of a l...

Q: On December 29, 2017, an employee received a $5

On December 29, 2017, an employee received a $5,000 check from her employer’s client. The check was payable to the employer. The employee did not remit the funds to the employer until December 30, 201...