Questions from Taxation

Q: At the beginning of its 2018 tax year, Hiram owned the

At the beginning of its 2018 tax year, Hiram owned the following business assets. On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $589,000; th...

Q: In April 2018, Lenape Corporation completed security, fire, and

In April 2018, Lenape Corporation completed security, fire, and heating system improvements to existing nonresidential real property with a total cost of $1,275,000. Assuming these improvements are 39...

Q: Ajax Inc. was formed on April 25 and elected a calendar

Ajax Inc. was formed on April 25 and elected a calendar year for tax purposes. Ajax paid $11,200 to the attorney who drew up the articles of incorporation and $5,100 to the CPA who advised the corpora...

Q: Company N will receive $100,000 of taxable revenue from

Company N will receive $100,000 of taxable revenue from a client. Compute the NPV of the $100,000 in each of the following cases: a. Company N will receive $50,000 now (year 0) and $50,000 in year 1....

Q: Mr. and Mrs. FB, a retired couple, decided

Mr. and Mrs. FB, a retired couple, decided to open a family restaurant. During March and April, they incurred the following expenses. Mr. and Mrs. FB served their first meal to a customer on May 1....

Q: Mr. Z, a calendar year taxpayer, opened a new

Mr. Z, a calendar year taxpayer, opened a new car wash. Prior to the car wash’s grand opening on October 8, Mr. Z incurred various start-up expenditures (rent, utilities, employee salaries, supplies,...

Q: MNO is a calendar year taxpayer. On March 1, MNO

MNO is a calendar year taxpayer. On March 1, MNO signed a 36month lease on 2,100 square feet of commercial office space. It paid a $3,240 fee to the real estate agent who located the space and negotia...

Q: On April 23, Mrs. Y purchased a taxi business from

On April 23, Mrs. Y purchased a taxi business from Mr. M for a $60,000 lump-sum price. The business consisted of a two-year-old taxicab worth $19,000, Mr. M’s license to operate a taxi business in Bal...

Q: On November 13, Underhill Inc., a calendar year taxpayer,

On November 13, Underhill Inc., a calendar year taxpayer, purchased a business for a $750,000 lump-sum price. The business’s balance sheet assets had the following appraised FMV. Accounts receivable...

Q: SEP, a calendar year corporation, reported $918,000

SEP, a calendar year corporation, reported $918,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: SEP...