Questions from General Taxation

Q: Vandell is a taxpayer in the 28 percent tax bracket. He

Vandell is a taxpayer in the 28 percent tax bracket. He invests in Otay Mesa Water District Bonds that pay 4.5 percent interest. What taxable interest rate will provide the same after-tax return to Va...

Q: Arlen is required by his divorce agreement to pay alimony of $

Arlen is required by his divorce agreement to pay alimony of $2,000 a month and child support of $2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen? What is...

Q: Randi qualifies for a home deduction. The amount of space devoted

Randi qualifies for a home deduction. The amount of space devoted to business use is 400 square feet of the total 2,000 square feet of her home. Randi’s mortgage interest and propert...

Q: Karen is a wealthy retired investment advisor who is in the 35

Karen is a wealthy retired investment advisor who is in the 35 percent tax bracket. She has a choice between investing in a high-quality municipal bond paying 5 percent or a high-quality corporate bon...

Q: Ann is a self-employed restaurant critic who does her work

Ann is a self-employed restaurant critic who does her work exclusively from a home office. Ann’s income is $25,000 before the home office deduction this year. Her office takes up 200 square feet of he...

Q: Lydia, a married individual, was unemployed for a few months

Lydia, a married individual, was unemployed for a few months during 2016. During the year, she received $3,250 in unemployment compensation payments. How much of her unemployment compensation payments...

Q: Carl has had a couple of good years in his new business

Carl has had a couple of good years in his new business. However, in the current year he has a net operating loss of $80,000. He does not feel that the future of his business is very bright. As his ta...

Q: Linda and Richard are married and file a joint return for 2016

Linda and Richard are married and file a joint return for 2016. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline;...

Q: Maggie lost her job in the current year. She paid the

Maggie lost her job in the current year. She paid the expenses of owning her home, interest on the mortgage, and property taxes out of savings. Her tax return shows negative taxable income of $20,000....

Q: Ellen’s tax client is employed at a large company that offers medical

Ellen’s tax client is employed at a large company that offers medical flexible spending accounts to its employees. Tom must decide at the beginning of the year whether he wants to put as much as $2,55...