Questions from General Taxation

Q: June and John decide to form a business. They each plan

June and John decide to form a business. They each plan to contribute $20,000 in exchange for a 50 percent interest in the business. They will then take out a bank loan for $30,000 to cover the balanc...

Q: Assume the same facts as problem 53, except that the business

Assume the same facts as problem 53, except that the business expects to make a cash distribution of $28,000 each to June and John the first year. Determine how much tax the business will pay and how...

Q: Assume the same facts as problem 53, except that John and

Assume the same facts as problem 53, except that John and June expect the business will have a $44,000 loss in the first year (instead of a $64,000 profit) and will not make any cash distributions. De...

Q: Clara and Charles decide to form a business. They each plan

Clara and Charles decide to form a business. They each plan to contribute $15,000 in exchange for a 50 percent interest. The business will borrow $20,000 to cover the balance of its working capital ne...

Q: Justin’s 24-year-old son, Carlos, is a

Justin’s 24-year-old son, Carlos, is a full-time student. In April 2017, Justin gave Carlos 450 shares of Striker Oil stock. Justin purchased the stock 8 months earlier at $18 per share. On the gift d...

Q: Differentiate a consumption-based tax from an income tax and illustrate

Differentiate a consumption-based tax from an income tax and illustrate with an example.

Q: Linda’s husband dies, naming her the sole beneficiary of a $

Linda’s husband dies, naming her the sole beneficiary of a $500,000 life insurance policy. The insurance company informs her that she has two options: (1) she can receive the entire $500,000 in one lu...

Q: Three years ago, Netcom granted an ISO to Karen to buy

Three years ago, Netcom granted an ISO to Karen to buy 2,000 shares of Netcom stock at $6 per share exercisable for five years. At the date of the grant, Netcom stock was selling for $5 per share. Thi...

Q: Four years ago, Handcock Corporation granted 300 SARs to Maria as

Four years ago, Handcock Corporation granted 300 SARs to Maria as a bonus. Handcock’s stock was worth $20 a share on the date of grant. Maria exercises her SARs this year when the stock is worth $60 a...

Q: Melissa has $90,000 in salary from her full-

Melissa has $90,000 in salary from her full-time position and $40,000 in net income in 2017 from consulting as an independent contractor. What is her self-employment tax? What portion of this can she...