Questions from Federal Taxation

Q: Kelly recently was promoted and received a substantial raise. She talks

Kelly recently was promoted and received a substantial raise. She talks to her tax adviser about the potential tax ramifications. After making some projections, her adviser “welcomes her to the AMT cl...

Q: How could the AMT be calculated without using regular taxable income as

How could the AMT be calculated without using regular taxable income as a starting point? Be specific.

Q: A retailer’s store is destroyed by a tornado but is insured for

A retailer’s store is destroyed by a tornado but is insured for its replacement cost. Consequently, the retailer has a $40,000 gain after receiving the insurance proceeds. The store is not replaced be...

Q: Dart Corporation (a calendar year C corporation) would like to

Dart Corporation (a calendar year C corporation) would like to invest some of its excess earnings from retail operations in real estate. Dart is considering a purchase of 10 acres of land in a city wh...

Q: Rust Company is a real estate construction business with average annual gross

Rust Company is a real estate construction business with average annual gross receipts of $3 million. Rust uses the completed contract method on a particular contract that requires 16 months to comple...

Q: Burt, the CFO of Amber, Inc., was granted incentive

Burt, the CFO of Amber, Inc., was granted incentive stock options in 2012. Burt exercised the options in February 2016, when the exercise price was $75,000 and the fair market value of the stock was $...

Q: In 2017, Liza exercised an incentive stock option that had been

In 2017, Liza exercised an incentive stock option that had been granted to her in 2014 by her employer, White Corporation. Liza acquired 100 shares of White stock for the option price of $190 per shar...

Q: Pedro, age 57, is the sole owner of his principal

Pedro, age 57, is the sole owner of his principal residence, which he has owned and occupied for 10 years. Maria, his spouse, has also lived there 10 years. He sells the house for a realized gain of $...

Q: Valentina, who is single, itemizes deductions and has no dependents

Valentina, who is single, itemizes deductions and has no dependents. In the current year, she earned $6,000 of municipal bond interest income, and she paid state income taxes of $5,600, mortgage inter...

Q: Sammy and Monica, both age 67, incur and pay medical

Sammy and Monica, both age 67, incur and pay medical expenses in excess of insurance reimbursements during the year as follows. For Sammy……………………………….$16,000 For Monica (wife)…………………………4,000 For Chuc...