Questions from Taxation

Q: Calvin Corporation’s office was burglarized. The thieves stole 10 laptop computers

Calvin Corporation’s office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had an original cost of $35,000 and accumulated tax depreciation of $...

Q: Bali Inc. reported $605,800 net income before tax

Bali Inc. reported $605,800 net income before tax on this year’s financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: Depreciation expense...

Q: St. George Inc. reported $711,800 net income

St. George Inc. reported $711,800 net income before tax on this year’s financial statement prepared in accordance with GAAP. The corporation’s records reveal the following information: Four years ago,...

Q: Ms. D sold a business that she had operated as a

Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets. The purchaser paid a lump-sum price of $30...

Q: Twelve years ago, Mr. and Mrs. Chang purchased a

Twelve years ago, Mr. and Mrs. Chang purchased a business. This year, they sold the business for $750,000. On date of sale, the business balance sheet showed the following assets. The sales contract...

Q: Firm Q is about to engage in a transaction with the following

Firm Q is about to engage in a transaction with the following cash flows over a three-year period: If the firm’s marginal tax rate over the three-year period is 30 percent and its...

Q: KNB sold real property to Firm P for $15,000

KNB sold real property to Firm P for $15,000 cash and Firm P’s assumption of the $85,000 mortgage on the property. a. What is KNB’s amount realized on sale? b. Compute KNB’s after-tax cash flow from t...

Q: Firm UT sold realty to an unrelated buyer for $40,

Firm UT sold realty to an unrelated buyer for $40,000 cash plus the buyer’s assumption of a $166,700 mortgage on the property. UT’s initial cost basis in the realty was $235,000, and accumulated tax d...

Q: TPW, a calendar year taxpayer, sold land with a $

TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining...

Q: Refer to the facts in the preceding problem and assume that TPW

Refer to the facts in the preceding problem and assume that TPW uses the installment sale method of accounting. a. Compute the difference between TPW’s book and tax income resulting from the installme...