Questions from Federal Taxation

Q: During 2017, Susan incurred and paid the following expenses for Beth

During 2017, Susan incurred and paid the following expenses for Beth (her daughter), Ed (her father), and herself: Surgery for Beth………………………………………………….$4,500 Red River Academy charges for Beth: Tuiti...

Q: Jerry and Ernie are comparing their tax situations. Both are paying

Jerry and Ernie are comparing their tax situations. Both are paying all of the nursing home expenses of their parents. Jerry can include the expenses in computing his medical expense deduction, but Er...

Q: Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000 on August 15, 2017. The assets of the business are as follows: a. Calculate Agnes’s realiz...

Q: In the current year, Pelican, Inc., incurs $10

In the current year, Pelican, Inc., incurs $10,000 of meals and entertainment expenses that it deducts in computing net income per the corporation’s financial statements. All of the meals and entertai...

Q: In January 2017, Pelican, Inc., established an allowance for

In January 2017, Pelican, Inc., established an allowance for uncollectible accounts (bad debt reserve) of $70,000 on its books and increased the allowance by $120,000 during the year. As a result of a...

Q: David, a sole proprietor of a bookstore, pays a $

David, a sole proprietor of a bookstore, pays a $7,500 premium for medical insurance for him and his family. Joan, an employee of a small firm that doesn’t provide her with medical insurance, pays med...

Q: Jane suffers from a degenerative spinal disorder. Her physician said that

Jane suffers from a degenerative spinal disorder. Her physician said that swimming could help prevent the onset of permanent paralysis and recommended the installation of a swimming pool at her reside...

Q: In the current year, Riflebird Company had operating income of $

In the current year, Riflebird Company had operating income of $220,000, operating expenses of $175,000, and a long-term capital loss of $10,000. How do Riflebird Company and Roger, the sole owner of...

Q: Ellie and Linda are equal owners in Otter Enterprises, a calendar

Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition...

Q: In the current year, Azure Company has $350,000

In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds...