Questions from Federal Taxation

Q: The Hawk Corporation builds yachts. The vessels it currently produces are

The Hawk Corporation builds yachts. The vessels it currently produces are practically identical and are completed in approximately 8 months. A customer has approached Hawk about constructing a larger...

Q: Is a note receivable that arose in the ordinary course of the

Is a note receivable that arose in the ordinary course of the taxpayer’s retail business a capital asset? Why or why not?

Q: Jimenez Enterprises is incorporated in Arkansas. It generated a $5

Jimenez Enterprises is incorporated in Arkansas. It generated a $5 million profit on its overseas operations this year. Jimenez paid $1 million in income taxes to various countries on these profits. J...

Q: Pam owns a personal use boat that has a fair market value

Pam owns a personal use boat that has a fair market value of $35,000 and an adjusted basis of $45,000. Pam’s AGI is $100,000. Calculate the realized and recognized gain or loss if: a. Pam sells the bo...

Q: Would a tax year ending December 31 be appropriate for a ski

Would a tax year ending December 31 be appropriate for a ski lodge? Why or why not?

Q: Ross Company is a corporation providing medical diagnostic services. Ross has

Ross Company is a corporation providing medical diagnostic services. Ross has used the cash method since inception because its gross receipts did not exceed $5,000,000. This year its average annual gr...

Q: Floyd, a cash basis taxpayer, has received an offer to

Floyd, a cash basis taxpayer, has received an offer to purchase his land. The cash basis buyer will pay him either $100,000 at closing or $50,000 at closing and $56,000 two years after the date of clo...

Q: Kay, who is not a dealer, sold an apartment house

Kay, who is not a dealer, sold an apartment house to Polly during the current year (2017). The closing statement for the sale is as follows: During 2017, Kay collected $9,000 in principal on the ins...

Q: On June 30, 2017, Kelly sold property for $240

On June 30, 2017, Kelly sold property for $240,000 cash and a $960,000 note due on September 30, 2018. The note will also pay 6% interest, which is slightly higher than the Federal rate. Kelly’s cost...

Q: On December 30, 2016, Maud sold land to her son

On December 30, 2016, Maud sold land to her son, Charles, for $50,000 cash and a 7% installment note for $350,000, payable over 10 years. Maud’s cost of the land was $150,000. In October 2018, after C...