Questions from Federal Taxation

Q: Lonzo owns two apartment buildings. He acquired Forsythia Acres on February

Lonzo owns two apartment buildings. He acquired Forsythia Acres on February 21, 1998, for $300,000 ($90,000 allocated to the land) and Square One on November 12, 2017, for $800,000 ($100,000 allocated...

Q: Helen Carlton acquired used equipment for her business at a cost of

Helen Carlton acquired used equipment for her business at a cost of $300,000. The equipment is five-year class property for regular income tax purposes and for AMT purposes. Helen does not claim any a...

Q: Cheryl incurred $8,700 of medical expenses in November 2017

Cheryl incurred $8,700 of medical expenses in November 2017. On December 5, the clinic where she was treated mailed her the insurance claim form it had prepared for her with a suggestion that she sign...

Q: Lloyd owns a beach house (four years) and a cabin

Lloyd owns a beach house (four years) and a cabin in the mountains (six years). His adjusted basis is $300,000 in the beach house and $315,000 in the mountain cabin. Lloyd also rents a townhouse in th...

Q: In December of each year, Eleanor Young contributes 10% of

In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 28% marginal tax bracket, is considering the following altern...

Q: Geoff incurred $900,000 of mine and exploration expenditures.

Geoff incurred $900,000 of mine and exploration expenditures. He elects to deduct the expenditures as quickly as the tax law allows for regular income tax purposes. a. How will Geoff’s treatment of th...

Q: In May, Rebecca’s daughter, Isabella, sustained a serious injury

In May, Rebecca’s daughter, Isabella, sustained a serious injury that made it impossible for her to continue living alone. Isabella, who is a novelist, moved back into Rebecca’s home after the acciden...

Q: Christopher regularly invests in tech company stocks, hoping to become wealthy

Christopher regularly invests in tech company stocks, hoping to become wealthy by making an early investment in the next high-tech phenomenon. In 2011, Christopher purchased 3,000 shares of FlicksNet,...

Q: Chuck is single and has no dependents. He does not itemize

Chuck is single and has no dependents. He does not itemize deductions. In 2017, he claims a $4,050 personal exemption and records taxable income of $120,000. Chuck’s AMT preferences total $51,000. Wha...

Q: Jolene receives tax-exempt interest of $33,000 on

Jolene receives tax-exempt interest of $33,000 on bonds that are classified as private activity bonds. She properly excludes the $33,000 from her gross income for regular income tax purposes. Jolene a...