Questions from Federal Taxation

Q: On January 1 of the current year, the Orange Corporation issues

On January 1 of the current year, the Orange Corporation issues $500,000 of 11%, 20-year bonds for $480,000. Determine the amount of original issue discount, if any.

Q: Web Baker was hired three years ago by the Berry Corporation to

Web Baker was hired three years ago by the Berry Corporation to serve as CEO for the company. As part of his employment contract, the corporation had agreed to purchase his residence at FMV in the eve...

Q: Beth retires when she turns 65. She begins receiving a monthly

Beth retires when she turns 65. She begins receiving a monthly pension of $300 from her employer’s qualified retirement plan. While employed, Beth contributed $13,000 to the plan. a. Beth uses the si...

Q: On January 1, 2016, Sean purchased an 8%, $

On January 1, 2016, Sean purchased an 8%, $100,000 corporate bond for $92,277. The bond was issued on January 1, 2016, and matures on January 1, 2021. Interest is paid semiannually, and the effective...

Q: David, a CPA for a large accounting firm, often works

David, a CPA for a large accounting firm, often works 10- to 12-hour days. As a requirement for his position, he must attend social events to recruit new clients. In addition to his job with the accou...

Q: Robert provides much of the support for his daughter, Jane,

Robert provides much of the support for his daughter, Jane, and her two children. Jane earned $20,000. Robert, whose AGI is $350,000, paid the rent of $11,000 on Jane’s apartment and provided an addit...

Q: Partnerships and S corporations are flow-through entities. In connection

Partnerships and S corporations are flow-through entities. In connection with filing annual taxreturns, these entities must include Form K-1 in the returns. What is Form K-1, what is its purpose, and...

Q: Lynette, a famous basketball player, is considering the possibility of

Lynette, a famous basketball player, is considering the possibility of transferring the sole right to use her name to promote basketball shoes produced and sold by the NIK Corporation. NIK will pay $2...

Q: Under what circumstances can prepaid expenses be deducted in the year of

Under what circumstances can prepaid expenses be deducted in the year of payment by a taxpayer using the cash method of accounting?

Q: Larry and Sue separated at the end of the year. Larry

Larry and Sue separated at the end of the year. Larry has asked Sue to sign a joint income tax return for the year because he feels that the tax will be lower on a joint return. Larry and Sue both wor...