Questions from Federal Taxation

Q: Ted’s current year return reported a tax liability of $1,

Ted’s current year return reported a tax liability of $1,800. Ted’s wage withholding for the current year was $2,200. Because of his poor memory, Ted did not file his current year return until May 28...

Q: Ed’s tax liability for last year was $24,000.

Ed’s tax liability for last year was $24,000. Ed projects that his tax for this year will be $34,000. Ed is self-employed and, thus, will have no withholding. His AGI for last year did not exceed $150...

Q: The IRS audits Tan’s individual return for the current year and assesses

The IRS audits Tan’s individual return for the current year and assesses a $9,000 deficiency, $2,800 of which results from Tan’s negligence. What is the amount of Tan’s negligence penalty? Does the pe...

Q: Gene employed his attorney to draft identical trust instruments for each of

Gene employed his attorney to draft identical trust instruments for each of his three minor children: Judy (age 5), Terry (age 7), and Grady (age 11). Each trust instrument names the Fourth City Bank...

Q: On April 15 of Year 2, Adam and Renee Tyler jointly

On April 15 of Year 2, Adam and Renee Tyler jointly filed a Year 1 return that reported AGI of $68,240 ($20,500 attributable to Renee) and a tax liability of $3,050. They paid this amount in a timely...

Q: A colleague comes to you with the following investment proposal that he

A colleague comes to you with the following investment proposal that he would like to market for Client: • Client obtains cash of $60,000 from Bank. • Bank loan agreement specifies that $40,000 of...

Q: Five years ago, Spyros Dietrich wanted to sell IMPEXT, Inc

Five years ago, Spyros Dietrich wanted to sell IMPEXT, Inc., his wholly owned import export business. He also wanted to avoid recognizing the substantial gain that would result from his selling his IM...

Q: Assume that a trust collects rental income and interest income on tax

Assume that a trust collects rental income and interest income on tax-exempt bonds. Will a portion of the rental expenses, such as repairs, have to be allocated to tax-exempt income and thereby become...

Q: Art is named executor of the Estate of Stu Stone, his

Art is named executor of the Estate of Stu Stone, his father, who died on February 3 of the current year. Art hires Larry to be the estate’s attorney. Larry advises Art that the estate must file an es...

Q: Harold and Betty, factory workers who until this year prepared their

Harold and Betty, factory workers who until this year prepared their own individual tax returns, purchased an investment from a broker last year. Although they reviewed the prospectus for the investme...