Q: Firm PY purchased industrial equipment from a Canadian vendor. The firm
Firm PY purchased industrial equipment from a Canadian vendor. The firm paid $12,800 to transport the equipment to its manufacturing plant in Florida and a $1,700 premium for insurance against casualt...
See AnswerQ: WRT owns a chain of retail bookstores. It recently decided to
WRT owns a chain of retail bookstores. It recently decided to add coffee bars in each store to sell gourmet coffee drinks and pastries to the bookstore customers. WRT has not yet obtained the necessar...
See AnswerQ: In 2017, Firm Z elected to expense the $8,
In 2017, Firm Z elected to expense the $8,000 cost of a machine, which it reported as the only item of equipment placed in service that year. This year, the IRS audited Firm Z’s 2017 return and discov...
See AnswerQ: Company JJ, a calendar year corporation, bought an airplane for
Company JJ, a calendar year corporation, bought an airplane for use in its oil and gas business in December. The manufacturer delivered the plane to the company’s hangar on December 19. Because of sev...
See AnswerQ: TCJ bought a 10-acre tract of undeveloped land that it
TCJ bought a 10-acre tract of undeveloped land that it intends to improve and subdivide for sale to real estate customers. This year, TCJ paid $4,300 to a local company to clean up the land by hauling...
See AnswerQ: On March 1, DS Company, a calendar year taxpayer,
On March 1, DS Company, a calendar year taxpayer, recognized a $15,000 loss on sale of marketable securities. On May 12, it recognized an $85,000 Section 1231 gain on sale of an office building. In fo...
See AnswerQ: Corporation TJ ceased business operations and was dissolved under state law.
Corporation TJ ceased business operations and was dissolved under state law. On the last day of its existence, TJ’s balance sheet showed $2,200 unamortized organizational costs and $12,000 unamortized...
See AnswerQ: At the beginning of the year, Firm GH owned 8,
At the beginning of the year, Firm GH owned 8,200 shares of common stock in LSR, a publicly held corporation. GH’s basis in these shares was $290,000. On a day when LSR stock was trading at $1.14 per...
See AnswerQ: Ernlo is an accrual basis corporation with a June 30 fiscal year
Ernlo is an accrual basis corporation with a June 30 fiscal year-end. On June 2, 2019, Ernlo entered into a binding contract to purchase a sixmonth supply of heating oil from a local distributor at th...
See AnswerQ: Firm LD, a calendar year taxpayer, owns 20,000
Firm LD, a calendar year taxpayer, owns 20,000 shares of MXP stock with a $160,000 basis. In November, LD’s chief financial officer learned that MXP had just declared bankruptcy. The CFO was unable to...
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