Questions from Federal Taxation

Q: Swallow Company is a large real estate construction company that has made

Swallow Company is a large real estate construction company that has made a Subchapter S election. The company reports its income using the percentage of completion method. In 2018, the company comple...

Q: Red, White, and Blue are unrelated corporations engaged in real

Red, White, and Blue are unrelated corporations engaged in real estate development. The three corporations formed a joint venture (treated as a partnership) to develop a tract of land. Assuming that t...

Q: Mauve Corporation began operations as a farm supplies business and used a

Mauve Corporation began operations as a farm supplies business and used a fiscal year ending October 31. The company gradually went out of the farm supplies business and into the mail-order Christmas...

Q: Ivanna, who has three children under age 13, worked full

Ivanna, who has three children under age 13, worked full-time while her husband, Sergio, was attending college for nine months during the year. Ivanna earned $28,000 and incurred $9,100 of child care...

Q: Gold, Inc., is an accrual basis taxpayer. In 2017

Gold, Inc., is an accrual basis taxpayer. In 2017, an employee accidentally spilled hazardous chemicals on leased property. The chemicals destroyed trees on neighboring property, resulting in $30,000...

Q: Compute Mary’s income or deductions for 2017 using (1) the

Compute Mary’s income or deductions for 2017 using (1) the cash basis and (2) the accrual basis for each of the following: a. In May 2017, Mary paid a license fee of $1,200 for the period June 1, 2017...

Q: What accounting method (cash or accrual) would you recommend for

What accounting method (cash or accrual) would you recommend for the following businesses? a. A gift shop with average annual gross receipts of $900,000. b. An accounting partnership with annual gross...

Q: How do the all events and economic performance requirements apply to the

How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2017,...

Q: Which of the following results in a recognized gain or loss?

Which of the following results in a recognized gain or loss? a. Kay sells her vacation cabin (adjusted basis of $100,000) for $150,000. b. Adam sells his personal residence (adjusted basis of $150,000...

Q: Reba, who is single, does a lot of business entertaining

Reba, who is single, does a lot of business entertaining at home. Lawrence, Reba’s 84-year-old dependent grandfather, lived with Reba until this year, when he moved to Lakeside Nursing Home because he...