Questions from Federal Taxation

Q: The Adelaide Advertising Agency, a cash basis taxpayer, bills its

The Adelaide Advertising Agency, a cash basis taxpayer, bills its clients for services it renders and any out-of-pocket expenses it pays to third parties on behalf of its clients. For example, in crea...

Q: On July 1, 2017, Andaria borrows $30,000

On July 1, 2017, Andaria borrows $30,000 from the First Financial Bank. The loan is for 1-year at an annual interest rate of 10%. How much interest can Andaria deduct under each of the following situa...

Q: The Kane Corporation is an accrual basis taxpayer. State law requires

The Kane Corporation is an accrual basis taxpayer. State law requires that Kane acquire workers’ compensation insurance from a third-party carrier or maintain a self-funded insurance plan. Kane has d...

Q: Appliance Sales Corporation sells all types of appliances. In addition,

Appliance Sales Corporation sells all types of appliances. In addition, it offers purchasers of its appliances the option of purchasing repair contracts. During the current year, Appliance estimates...

Q: Shawna earns $95,000 as a biologist for Berto Corporation

Shawna earns $95,000 as a biologist for Berto Corporation. She also consults with other businesses on compliance with environmental regulations. During the current year, she earns $40,000 in consult...

Q: Gonzo Company is an accrual basis taxpayer. It provides medical insurance

Gonzo Company is an accrual basis taxpayer. It provides medical insurance for its employees through a self-insured reimbursement plan. Gonzo pays $150 per month per employee into the plan fund. The...

Q: Damon's Lawn and Garden Supply, an accrual basis taxpayer, is

Damon's Lawn and Garden Supply, an accrual basis taxpayer, is the exclusive dealer for Tru-Cut lawn mowers. In 2017, Damon's agrees to pay the Dash Corporation, the manufacturer of Tru-Cut, an additi...

Q: Explain the difference in determining the amount of income recognized from a

Explain the difference in determining the amount of income recognized from a conduit entity versus a taxable entity.

Q: Joy incurs the following expenses in her business. When can she

Joy incurs the following expenses in her business. When can she deduct the expenses if she uses the accrual method of accounting? the cash method? a. Joy rents an office building for $750 a month. B...

Q: The Parr Corporation incurs the following expenses. When can it deduct

The Parr Corporation incurs the following expenses. When can it deduct the expenses if it uses the accrual method of accounting? the cash method? a. Parr Corporation mails a check for $5,000 to the...