Questions from Federal Taxation

Q: Yancy’s personal residence is condemned as part of an urban renewal project

Yancy’s personal residence is condemned as part of an urban renewal project. His adjusted basis for the residence is $480,000. He receives condemnation proceeds of $460,000 and invests the proceeds in...

Q: Cherry Corporation, a calendar year C corporation, is formed and

Cherry Corporation, a calendar year C corporation, is formed and begins business on April 1, 2017. In connection with its formation, Cherry incurs organizational expenditures of $54,000. Determine Che...

Q: Compute the income tax liability for each of the following unrelated C

Compute the income tax liability for each of the following unrelated C corporations. a. Darter Corporation has taxable income of $68,000. b. Owl Corporation has taxable income of $10,800,000. c. Touca...

Q: Durell and Earline are married, file a joint return, and

Durell and Earline are married, file a joint return, and claim dependency exemptions for their two children, ages 5 years and 6 months. They also claim Earline’s 18-year-old son from a previous marria...

Q: Alice J. and Bruce M. Byrd are married taxpayers who

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Alice’s birthday is September 2...

Q: Asok’s AGI for 2017 is $133,050. Included in

Asok’s AGI for 2017 is $133,050. Included in this AGI is a $45,000 25% long-term capital gain and a $13,000 0%/15%/20% long-term capital gain. Asok is single, uses the standard deduction, and has only...

Q: Prance, Inc., earns pretax book net income of $800

Prance, Inc., earns pretax book net income of $800,000 in 2016. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $80,000. Prance reported no...

Q: Goose Corporation, a C corporation, incurs a net capital loss

Goose Corporation, a C corporation, incurs a net capital loss of $12,000 for 2017. It also has ordinary income of $10,000 in 2017. Goose had net capital gains of $2,500 in 2013 and $5,000 in 2016. a....

Q: Aqua Corporation purchases nonresidential real property on May 9, 2014,

Aqua Corporation purchases nonresidential real property on May 9, 2014, for $1 million. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 30, 2017,...

Q: Hummingbird Corporation, a closely held C corporation that is not a

Hummingbird Corporation, a closely held C corporation that is not a PSC, has $40,000 of net active income, $15,000 of portfolio income, and a $45,000 loss from a passive activity. Compute Hummingbird’...