Questions from Taxation

Q: Mr. Dunn, who has a 32 percent marginal tax rate

Mr. Dunn, who has a 32 percent marginal tax rate on ordinary income, recognized a $15,000 capital loss in 2018. Compute the tax savings from this loss assuming that: a. He also recognized an $18,000 s...

Q: In 2000, Ms. Ennis, a head of household,

In 2000, Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Seta stock. Seta is a qualified small business. This year, Ms. Ennis sold all 500 shares for $117,400. Her on...

Q: In 2005, Mr. Earl, a single taxpayer, contributed

In 2005, Mr. Earl, a single taxpayer, contributed $45,000 in exchange for 500 shares of DB stock. In 2008, he paid $40,000 to another shareholder to purchase 1,000 more DB shares. All DB’s stock quali...

Q: Ms. Reid borrowed $50,000 from a broker to

Ms. Reid borrowed $50,000 from a broker to purchase Lero Inc. common stock. This year, she paid $3,900 interest on the debt. Compute her itemized deduction for this interest in each of the following c...

Q: Mr. and Mrs. Poe earned $115,900 compensation

Mr. and Mrs. Poe earned $115,900 compensation income and $963 interest this year and recognized a $600 short-term capital gain and a $7,200 long-term capital gain on the sale of securities. They incur...

Q: Mr. and Mrs. Morris own a grocery store as a

Mr. and Mrs. Morris own a grocery store as a sole proprietorship. Their net profit and other relevant items for the year are as follows. Grocery store net profit …………………………………………$44,000 Deduction for...

Q: Mr. Kelly owns stock in VP and in BL, both

Mr. Kelly owns stock in VP and in BL, both of which are S corporations. This year, he had the following income and loss items. Salary …………………………………………………$62,300 Business income from VP ………………………19,00...

Q: Ms. Turney owns a one-half interest in an apartment

Ms. Turney owns a one-half interest in an apartment complex, which is her only passive activity. The complex operated at a $53,000 loss this year. In addition to her share of this loss, Ms. Turney had...

Q: Refer to the facts in the preceding problem. At the beginning

Refer to the facts in the preceding problem. At the beginning of the year, Mr. L could have invested his $50,000 in Business Z with an 8 percent annual return. However, this return would have been ord...

Q: Ms. Adams owns an interest in ABCD Partnership, which is

Ms. Adams owns an interest in ABCD Partnership, which is a passive activity. At the beginning of the year, she projects that her share of ABCD’s business loss will be $16,000 and that she will have th...