Questions from Federal Taxation

Q: Samuel had worked for Pearl, Inc., for 35 years when

Samuel had worked for Pearl, Inc., for 35 years when he was discharged and his position filled by a much younger person. He filed and pursued a suit for age discrimination and received an award of $1....

Q: Chloe, a self-employed dentist, tells you “My

Chloe, a self-employed dentist, tells you “My profits for the year total $300,000, so I don’t need to pay any more Federal self-employment taxes.” Evaluate Chloe’s comment.

Q: The precursor to the Alternative Minimum Tax enacted by the Tax Reform

The precursor to the Alternative Minimum Tax enacted by the Tax Reform Act of 1986 was the minimum tax, which was first devised in 1969. Find a discussion of the rationale for the original minimum tax...

Q: For 2017, Essence Company, a calendar year taxpayer, will

For 2017, Essence Company, a calendar year taxpayer, will change from using the cash method for tax purposes to the accrual method. At the end of 2016, Essence had the following items: Accounts recei...

Q: On December 30, 2017, Whitney sold a piece of property

On December 30, 2017, Whitney sold a piece of property for $85,000. Her basis in the property was $40,000, and she incurred $1,200 in selling expenses. The buyer paid $5,000 down with the balance paya...

Q: Missy, age 30, has owned her principal residence (adjusted

Missy, age 30, has owned her principal residence (adjusted basis of $225,000) for five years. During the first three years of ownership, she occupied it as her principal residence. During the past two...

Q: In 2017, Skylar sold an apartment building for $20,

In 2017, Skylar sold an apartment building for $20,000 cash and a $300,000 note due in two years. Skylar’s cost of the property was $250,000, and he had deducted depreciation of $150,000, $60,000 of w...

Q: Mary receives tangible personal property as a gift. The property was

Mary receives tangible personal property as a gift. The property was depreciated by the donor, and Mary will also depreciate it. At the date of the gift, the property was worth more than the donor’s a...

Q: Mason canceled a note issued by Emma (Mason’s niece) that

Mason canceled a note issued by Emma (Mason’s niece) that arose in connection with the sale of property. At the time of the cancellation, the note had a basis to Mason of $30,000, a face amount of $55...

Q: Bart and Elizabeth Forrest are married and have no dependents. They

Bart and Elizabeth Forrest are married and have no dependents. They have asked you to advise them whether they should file jointly or separately in 2017. They present you with the following informatio...