Questions from Federal Taxation

Q: Jebali Corporation, a calendar year taxpayer utilizing the completed contract method

Jebali Corporation, a calendar year taxpayer utilizing the completed contract method of accounting, constructed a building for Samson, Inc., under a longterm contract. The gross contract price was $2,...

Q: Shumpert, Inc., entered into a contract that was to take

Shumpert, Inc., entered into a contract that was to take two years to complete, with an estimated cost of $900,000. The contract price was $1,300,000. Costs of the contract for 2020, the first year, t...

Q: In 2021, Cao’s compensation before his employer’s contribution to a SEP

In 2021, Cao’s compensation before his employer’s contribution to a SEP is $66,000. Up to what amount can Cao’s employer contribute and deduct in 2021?

Q: Shondee Corporation uses the lower of cost or market and FIFO inventory

Shondee Corporation uses the lower of cost or market and FIFO inventory methods. At the end of 2020, the FIFO cost of the ending inventory was $181,000, and the market value of the inventory was $160,...

Q: Samantha, an accrual basis taxpayer, subscribes to a service that

Samantha, an accrual basis taxpayer, subscribes to a service that updates a database used in her business. In December 2021, Samantha paid the $120,000 subscription for the period January 2021 through...

Q: Zaire Corporation granted an ISO for 250 shares of its stock to

Zaire Corporation granted an ISO for 250 shares of its stock to Bruno on July 20, 2020, for services rendered. The option price was $130 and the fair market value was $130 on the date of the grant. Br...

Q: On April 5, 2019, Gustavo was granted an NQSO for

On April 5, 2019, Gustavo was granted an NQSO for 200 shares of common stock at $50 per share. On the date of the grant, there was no readily ascertainable fair market value for the option. Gustavo ex...

Q: Green Corporation, a calendar year taxpayer, has ordinary income of

Green Corporation, a calendar year taxpayer, has ordinary income of $10,000 and a long-term capital loss of $12,000 in 2021. Green incurred a long-term capital gain of $2,500 in 2018 and a long-term c...

Q: Maize Corporation (a calendar year taxpayer) was formed on April

Maize Corporation (a calendar year taxpayer) was formed on April 1, 2021. Calculate the maximum deduction for organizational expenses for 2021 if these costs were: a. $4,000. b. $24,000. c. $54,000. d...

Q: Bob is notified by the city public housing authority on May 3

Bob is notified by the city public housing authority on May 3, 2021, that his apartment building is going to be condemned as part of a commercial development project. On June 1, 2021, Stella offers to...