Questions from Federal Taxation

Q: In the current year, Woodpecker, Inc., a C corporation

In the current year, Woodpecker, Inc., a C corporation with $8.5 million in assets, reported amortization of $40,000 on its financial statements and deducted amortization of $55,000 on its Federal tax...

Q: Jim and Mary Jean are married and have two dependent children under

Jim and Mary Jean are married and have two dependent children under the age of 13. Both parents are gainfully employed and earn salaries as follows: $16,000 (Jim) and $5,200 (Mary Jean). To care for t...

Q: Marcellus Jackson, the CFO of Mac, Inc., notices that

Marcellus Jackson, the CFO of Mac, Inc., notices that the tax liability reported on Mac’s tax return is less than the tax expense reported on Mac’s financial statements. Provide a letter to Jackson ou...

Q: Jennifer and Jamie are starting a business and have asked you for

Jennifer and Jamie are starting a business and have asked you for advice about whether they should form a partnership, a corporation, or some other type of entity. Prepare a list of questions you woul...

Q: Ken and Mary Jane Blough, your neighbors, have asked you

Ken and Mary Jane Blough, your neighbors, have asked you for advice after receiving correspondence in the mail from the IRS. You learn that the IRS is asking for documentation in support of the itemiz...

Q: Barbara owns 40% of the stock of Cassowary Corporation (a

Barbara owns 40% of the stock of Cassowary Corporation (a C corporation) and 40% of the stock of Emu Corporation (an S corporation). In the current year, each corporation has operating income of $120,...

Q: Karen Samuels (Social Security number 123-45-6789)

Karen Samuels (Social Security number 123-45-6789) makes the following purchases and sales of stock: Assuming that Karen is unable to identify the particular lots that are sold with the original pur...

Q: Art, an executive with Azure Corporation, plans to start a

Art, an executive with Azure Corporation, plans to start a part-time business selling products on the internet. He will devote about 15 hours each week to running the business. Art’s salary from Azure...

Q: A sculpture that Korliss Kane held for investment was destroyed in a

A sculpture that Korliss Kane held for investment was destroyed in a flood. The sculpture was insured, and Korliss had a $60,000 gain from this casualty. He also had a $17,000 loss from an uninsured a...

Q: Janice is the sole owner of Catbird Company. In the current

Janice is the sole owner of Catbird Company. In the current year, Catbird had operating income of $100,000, a long-term capital gain of $15,000, and a charitable contribution of $5,000. Janice withdre...