Questions from Individual Taxation

Q: Hank, a calendar-year taxpayer, uses the cash method

Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $20,000 of legal services for a client. Hank typically requires his client...

Q: Mel and Cindy Gibson’s 12-year-old daughter Rachel was

Mel and Cindy Gibson’s 12-year-old daughter Rachel was abducted on her way home from school on March 15, 2018. Police reports indicated that a stranger had physically dragged Rachel into a waiting car...

Q: Elroy, who is single, has taken over the care of

Elroy, who is single, has taken over the care of his mother Irene in her old age. Elroy pays the bills relating to Irene’s home. He also buys all her groceries and provides the rest of her support. Ir...

Q: Last year Acme paid Ralph $15,000 to install a

Last year Acme paid Ralph $15,000 to install a new air-conditioning unit at its headquarters building. The air conditioner did not function properly, and this year Acme requested that Ralph return the...

Q: This year Evan graduated from college, and took a job as

This year Evan graduated from college, and took a job as a deliveryman in the city. Evan was paid a salary of $67,300 and he received $700 in hourly pay for part-time work over the weekends. Evan summ...

Q: L. A. and Paula file as married taxpayers. In

L. A. and Paula file as married taxpayers. In August of this year they received a $5,200 refund of state income taxes that they paid last year. How much of the refund, if any, must L. A. and Paula inc...

Q: Jeremy and Alyssa Johnson have been married for five years and do

Jeremy and Alyssa Johnson have been married for five years and do not have any children. Jeremy was married previously and has one child from the prior marriage. He is self-employed and operates his o...

Q: Marc and Michelle are married and earned salaries this year of $

Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corpo...

Q: Peggy is a rodeo clown, and this year she expended $

Peggy is a rodeo clown, and this year she expended $1,000 on special “funny” clothes and outfits. Peggy would like to deduct the cost of these clothes as work-related because she refuses to wear the c...

Q: Demarco and Janine Jackson have been married for 20 years and have

Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000...