Questions from Federal Taxation

Q: Wayne is single and has no dependents. Without considering his $

Wayne is single and has no dependents. Without considering his $11,000 adjusted net capital gain (ANCG), his taxable income, which includes no investment income, in 2017 is as follows: a. What is Wayn...

Q: The effective tax rate on gain of $1 million resulting from

The effective tax rate on gain of $1 million resulting from the sale of qualified small business stock obtained in 2005 in an initial public offering and held more than five years is 14%. Do you agree...

Q: In order for a business expense to be deductible it must be

In order for a business expense to be deductible it must be ordinary, necessary, and reasonable. Explain what these terms mean.

Q: During the year, Sara sold a capital asset at a loss

During the year, Sara sold a capital asset at a loss of $2,000. She had held the asset as an investment. This is the only capital asset she sold during the year. Is her deduction for this capital loss...

Q: a. Explain the difference between income splitting and income shifting.

a. Explain the difference between income splitting and income shifting. b. Why are taxpayers interested in shifting income from one tax return to another within the same family or economic unit? c. Is...

Q: a. The tax law refers to gross income, yet the

a. The tax law refers to gross income, yet the term gross income is not found on Form 1040. Explain. b. Why is it important to understand the concept of gross income even though the term is not found...

Q: On February 10, 2017, Gail purchases 20 calls on Red

On February 10, 2017, Gail purchases 20 calls on Red Corporation for $250 per call. Each call represents an option to buy 100 shares of Red stock at $42 per share any time before November 25, 2017. Co...

Q: The governor of your state stated in a recent political speech that

The governor of your state stated in a recent political speech that he has never supported any income tax increases as the tax rates have remained at the same level during his entire term of office. Y...

Q: Danielle Anderson, your client and a cash method taxpayer, works

Danielle Anderson, your client and a cash method taxpayer, works full-time at a music store located in a mall. She assists the manager in buying decisions, serves customers on the sales floor, and pla...

Q: During November and December of last year, Tommy’s, Inc.,

During November and December of last year, Tommy’s, Inc., incurred the following expenses ininvestigating the feasibility of opening a new restaurant in town: Expenses to do a market survey…………………………...