Questions from Federal Taxation

Q: On August 10, 2019, Jasper purchased business equipment for $

On August 10, 2019, Jasper purchased business equipment for $40,000. On his 2019 tax return, $40,000 of § 179 immediate expense was taken on the equipment. On July 14, 2020, Jasper sold the equipment...

Q: Adrian has a 2020 Form 4797, line 9 gain of $

Adrian has a 2020 Form 4797, line 9 gain of $56,000. He also has one transaction on his 2020 Form 1040 Schedule D, Part I—a loss of $58,000. What is Adrian’s AGI from these events?

Q: Theresa has a 2020 Form 1040 Schedule D, line 16 gain

Theresa has a 2020 Form 1040 Schedule D, line 16 gain of $45,000. There is also a $45,000 gain on the form’s line 19. What is the nature of the gain? What alternative tax rate applies to it?

Q: The Cardinal Wholesale Company is an S corporation that began business on

The Cardinal Wholesale Company is an S corporation that began business on March 1, 2021. Robert, a calendar year taxpayer, owns 100% of the Cardinal stock. He has $400,000 taxable income from other so...

Q: In 2020, Juan entered into a contract to write a book

In 2020, Juan entered into a contract to write a book. The publisher advanced Juan $50,000, which was to be recovered out of future royalties. If the book was not completed by the end of 2021, however...

Q: Shen purchased corporate stock for $20,000 on April 10

Shen purchased corporate stock for $20,000 on April 10, 2019. On July 14, 2021, when the stock was worth $12,000, Shen died and his son, Mijo, inherited the stock. Mijo sold the stock for $14,200 on N...

Q: Gold, Inc., is an accrual basis taxpayer. In 2021

Gold, Inc., is an accrual basis taxpayer. In 2021, an employee accidentally spilled hazardous chemicals on leased property. The chemicals destroyed trees on neighboring property, resulting in $30,000...

Q: Compute Mary’s income or deductions for 2021 using (1) the

Compute Mary’s income or deductions for 2021 using (1) the cash basis and (2) the accrual basis for each of the following. a. In May 2021, Mary paid a license fee of $1,200 for the period June 1, 2021...

Q: Which accounting method (cash or accrual) would you recommend for

Which accounting method (cash or accrual) would you recommend for the following businesses? a. A gift shop with average annual gross receipts of $900,000. b. An accounting partnership with average ann...

Q: Blue Company, an architectural firm, has a bookkeeper who maintains

Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2021), the company hires you to convert the cash receipts and dis...