Questions from Federal Taxation

Q: Shannon owns two items of business equipment. Both were purchased in

Shannon owns two items of business equipment. Both were purchased in 2017 for $100,000, both have a 7-year MACRS recovery period, and both have an adjusted basis of $37,490. Shannon is considering sel...

Q: Myers, who is single, has compensation income of $73

Myers, who is single, has compensation income of $73,000 in 2021. He is an active participant in his employer’s qualified retirement plan. Myers contributes $6,000 to a traditional IRA. Of the $6,000...

Q: Mina, who is single, would like to contribute $6

Mina, who is single, would like to contribute $6,000 to her Roth IRA. Her AGI is $131,000. What is the maximum amount that Mina can contribute? Show your answer in Microsoft Excel.

Q: Near the end of 2021, Byron realizes that he has a

Near the end of 2021, Byron realizes that he has a net short-term capital loss of $13,000 for the year. Byron has taxable income (not including the loss) of $123,000 and is single. He owns numerous st...

Q: In 2021, Aurora received a $25,000 bonus computed

In 2021, Aurora received a $25,000 bonus computed as a percentage of profits. In 2022, Aurora’s employer determined that the 2021 profits had been incorrectly computed, and Aurora had to refund the $8...

Q: In 2021, Chaya Corporation, an accrual basis, calendar year

In 2021, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clients signed notes receivable to Chaya that have a fair market value of $22...

Q: For 2021, Essence Company, a calendar year taxpayer, will

For 2021, Essence Company, a calendar year taxpayer, will change from the cash method for tax purposes to the accrual method. At the end of 2020, Essence showed the following items. Accounts receivabl...

Q: On December 30, 2021, Whitney sold a piece of property

On December 30, 2021, Whitney sold a piece of property for $85,000. Her basis in the property was $40,000, and she incurred $1,200 in selling expenses. The buyer paid $5,000 down with the balance paya...

Q: In 2021, Skylar sold an apartment building for $20,

In 2021, Skylar sold an apartment building for $20,000 cash and a $300,000 note due in two years. Skylar’s cost of the property was $250,000, and he had deducted depreciation of $150,000, $60,000 of w...

Q: Farhad canceled a note issued by Emma (Farhad’s niece) that

Farhad canceled a note issued by Emma (Farhad’s niece) that arose in connection with the sale of property. At the time of the cancellation, the note had a basis to Farhad of $30,000, a face amount of...