Questions from Taxation

Q: Firm Z, a corporation with a 21 percent tax rate,

Firm Z, a corporation with a 21 percent tax rate, has $100,000 to invest in year 0 and two investment choices. Investment 1 will generate $12,000 taxable cash flow annually for years 1 through 5. In y...

Q: Mr. RH purchased 30 acres of undeveloped ranch land 10 years

Mr. RH purchased 30 acres of undeveloped ranch land 10 years ago for $935,000. He is considering subdividing the land into one-third acre lots and improving the land by adding streets, sidewalks, and...

Q: Assuming a 21 percent marginal tax rate, compute the after-

Assuming a 21 percent marginal tax rate, compute the after-tax cost of the following business expenses: a. $5,600 premium on business property and casualty insurance. b. $1,200 fine paid for business...

Q: For its first four years of operation, Corporation Y reported the

For its first four years of operation, Corporation Y reported the following taxable income. In 2018, Corporation Y generated $900,000 ordinary income and recognized a $20,000 loss on the sale of a c...

Q: Olno Inc. has a $52,100 capital loss carryforward

Olno Inc. has a $52,100 capital loss carryforward into its current taxable year that will expire at the end of the year. During the year, Olno realized a $141,900 capital gain on sale of land. The pur...

Q: Rocky Corporation is experiencing cash flow problems. It needs to generate

Rocky Corporation is experiencing cash flow problems. It needs to generate an additional $60,000 of working capital and is considering selling off assets to meet this need. Rocky’s marginal tax rate i...

Q: Firm NS owns 90 percent of Corporation T’s outstanding stock. NS

Firm NS owns 90 percent of Corporation T’s outstanding stock. NS also owns business realty that T needs for use in its business. The FMV of the realty is $4 million, and NS’s adjusted basis is $5.6 mi...

Q: Firm K, a non corporate taxpayer, has owned investment land

Firm K, a non corporate taxpayer, has owned investment land with a $600,000 basis for four years. Two unrelated parties want to acquire the land from K. Party A has offered $770,000 cash, and Party B...

Q: DM Inc. incurred a $25,000 net capital loss

DM Inc. incurred a $25,000 net capital loss last year that has carried forward into the current year. During the current year, a hurricane destroyed business assets with a $120,000 basis. DM received...

Q: Mr. and Mrs. Janus operate a restaurant business as a

Mr. and Mrs. Janus operate a restaurant business as a sole proprietorship. The couple has decided to purchase $85,000 of new kitchen equipment for the restaurant. They also want to buy two new automob...