Questions from Taxation

Q: Four years ago, Lyle Mercer was injured in a railroad accident

Four years ago, Lyle Mercer was injured in a railroad accident and sued the railroad for damages. The jury required the railroad to pay $600,000 compensation for his physical injuries, $150,000 for lo...

Q: Ann Moore receives a $1,000 monthly payment from her

Ann Moore receives a $1,000 monthly payment from her former husband Bill. How much of the $12,000 annual receipt is included in Ann’s AGI under each of the following assumptions? a. The monthly paymen...

Q: Will and Sandra Emmet were divorced this year. As part of

Will and Sandra Emmet were divorced this year. As part of the property settlement, Sandra transferred marketable securities to Will. Her basis in the securities was $89,800, and their FMV was $168,000...

Q: Mr. Lynch had the following items of financial support this year

Mr. Lynch had the following items of financial support this year. Compute Mr. Lynch’s AGI.

Q: Mr. and Mrs. Boyd Knevel use a fiscal year ending

Mr. and Mrs. Boyd Knevel use a fiscal year ending July 31 as the taxable year for filing their joint Form 1040. a. What is the last date on which the Knevels can apply for an automatic extension of ti...

Q: Collin Products received notice of a $21,000 income tax

Collin Products received notice of a $21,000 income tax deficiency plus $4,300 interest. The deficiency related to an incorrect method of accounting for business inventory. Compute the after-tax cost...

Q: Mrs. Small had the following items of financial support this year

Mrs. Small had the following items of financial support this year. Social Security benefits…………………………..$13,670 Pension from her former employer………..…..10,800 Cash gifts from her grandchildren…………..…....

Q: Milt Payner purchased an automobile several years ago for $40,

Milt Payner purchased an automobile several years ago for $40,000 and has held it as a personal asset ever since. This year he sold the automobile. Compute Milt’s recognized gain or loss on the sale i...

Q: LZ Corporation uses a fiscal year ending September 30. The controller

LZ Corporation uses a fiscal year ending September 30. The controller filed LZ’s Form 1120 for the year ending September 30, 2018, on October 23, 2018. a. What is the last day on which the IRS may ass...

Q: Mr. Hall prepared and signed last year’s tax return on April

Mr. Hall prepared and signed last year’s tax return on April 3. However, he forgot to mail the return until the morning of April 20. He enclosed his check for the $3,612 balance of tax due with the re...