Questions from Taxation

Q: Two years ago, Lodi Inc.’s shareholders voted to dissolve

Two years ago, Lodi Inc.’s shareholders voted to dissolve the corporation. Pursuant to the dissolution, Lodi sold all its assets, paid off its outstanding debts, and distributed $789,000 remaining cas...

Q: Mr. NG is an enrolled agent in tax practice. Last

Mr. NG is an enrolled agent in tax practice. Last year, the IRS imposed a $1,000 preparer penalty on him, and he immediately hired an attorney to contest the penalty. Mr. NG’s legal fee was $7,900. Wa...

Q: Mr. and Mrs. Marcum live in Southern California in an

Mr. and Mrs. Marcum live in Southern California in an area devastated by wildfires that President Trump designated a federally declared disaster. Because of fire damage, the Marcums had to replace the...

Q: Refer to the preceding problem. How would your answers change if

Refer to the preceding problem. How would your answers change if the fire that damaged the Marcums’ roof was attributable to faulty electrical wiring in their attic? Data from Problem 24: Mr. and Mr...

Q: Both NK and CS are closely held corporations. NK’s tax returns

Both NK and CS are closely held corporations. NK’s tax returns for the last five years reflect average taxable income of $90 million. CS’s tax returns for the same period reflect average taxable incom...

Q: Mr. and Mrs. BL filed a joint tax return reporting

Mr. and Mrs. BL filed a joint tax return reporting $24,000 AGI. During the year, Mr. BL was extremely ill and was hospitalized for four months. Mrs. BL, desperate for funds to pay her husband’s medica...

Q: Mr. and Mrs. Wickham did not apply for an extension

Mr. and Mrs. Wickham did not apply for an extension of time to file their 2017 Form 1040. Because they were vacationing outside the United States, they neglected to file their Form 1040 until July 14,...

Q: Mr. and Mrs. Udall live in a home that Mrs

Mr. and Mrs. Udall live in a home that Mrs. Udall inherited from her parents. This year, the Udalls took out a first mortgage secured by the home. Determine their itemized deduction for interest paid...

Q: Mr. and Mrs. Kim own a principal residence and a

Mr. and Mrs. Kim own a principal residence and a vacation home. Each residence is subject to a mortgage that qualifies as acquisition debt, and both mortgages were incurred before December 15, 2017. T...

Q: During a field examination of GNT’s income tax returns for 2015 and

During a field examination of GNT’s income tax returns for 2015 and 2016, the revenue agent discovered that the treasurer had systematically omitted substantial income items and inflated deductions to...