Questions from Taxation

Q: For its first taxable year, Rony Inc.’s accounting records

For its first taxable year, Rony Inc.’s accounting records showed the following. Operating loss per books ………………………….…$(800,000) Temporary book/tax difference   …………………..90,000 Net operating loss for...

Q: ZEJ, a calendar year accrual basis taxpayer, made the following

ZEJ, a calendar year accrual basis taxpayer, made the following adjustments to its allowance for bad debts this year. January 1 allowance for bad debts ………………………….$895,000 Actual write-offs of accoun...

Q: Firm Q operates a cash basis consulting business. In October,

Firm Q operates a cash basis consulting business. In October, Firm Q billed a client for $23,400 of consulting services. In November, the client settled the bill by paying $10,000 cash and transferrin...

Q: RTY is a calendar year corporation. On December 12, RTY

RTY is a calendar year corporation. On December 12, RTY billed a client $17,800 for services rendered during October and November. It had not received payment by December 31. On December 10, RTY recei...

Q: Determine the tax basis of the business asset acquired in each of

Determine the tax basis of the business asset acquired in each of the following cases: a. Firm L paid $5,950 cash plus $416 sales tax plus a $500 installation charge for a satellite dish. b. TTP Inc....

Q: ABC Company purchased business property several years ago, paying $25

ABC Company purchased business property several years ago, paying $25,000 cash and borrowing $80,000 to fund the acquisition. ABC also incurred $2,000 of freight costs for shipping the property to its...

Q: Margaret, a married taxpayer filing a joint return, engaged in

Margaret, a married taxpayer filing a joint return, engaged in two business activities this year. Business A earned $470,000 of profit. Business B incurred a loss of $(995,000). How much of Margaret’s...

Q: Jahlil is a 10 percent partner in a partnership that incurred a

Jahlil is a 10 percent partner in a partnership that incurred a $4 million business loss this year. Jahlil has no other business activities. How much of Jahlil’s partnership loss can he deduct this ye...

Q: Early this year, ZeZe Inc. paid a $52,

Early this year, ZeZe Inc. paid a $52,000 legal fee in connection with a dispute over ZeZe’s title to investment land. ZeZe’s auditors required the corporation to expense the payment on this year’s fi...

Q: On July 8, Divo Company sold office supplies for $13

On July 8, Divo Company sold office supplies for $13,000. Determine the amount and the character of Divo’s gain or loss on sale under each of the following assumptions: a. Divo is a retail store that...