Question: Alexander works as an electrician at a

> The first case at the end of this chapter and numerous subsequent chapters is a series of integrative cases involving Wal-Mart Stores, Inc. (Walmart). The series of cases applies the concepts and analytical tools discussed in each chapter to Walmart&acir

> Jeff, a single individual, receives $5,000 interest income from Treasury bills and $18,000 in Social Security benefits. What is Jeff’s gross income?

> Julie wins $15 million in the lottery payable over 30 years. In years 1 through 4, she receives annual installments of $500,000. At the beginning of year 5, Julie sells her right to receive the remaining 26 payments to a third party for a lump-sum paymen

> The Board of Directors of CYZ Corporation votes to issue two shares of stock for each share held as a stock dividend to shareholders. Just prior to the dividend, Cheryl owns 100 shares of CYZ Corporation stock that she purchased for $10 per share. She re

> Carl paid $40,000 to the City of Hollywood for general revenue bonds. During the current year, he received $2,300 interest income from the bonds. Market interest rates drop, causing the value of the bonds to increase so Carl sells the bonds for $43,000.

> Jose (SSN 150-45-6789) and Rosanna (SSN 123-45-7890) Martinez are a married couple who reside at 1234 University Drive in Coral Gables, FL 33146. They have two children: Carmen, age 19 (SSN 234-65-4321), and Greg, age 10 (SSN 234-65-5432). Carmen is a fu

> Janice Morgan is 17 and in her senior year of high school. She lives with her parents at 7829 Dowry Lane, Boston, MA 02112, and they are her primary source of support and claim her as a dependent on their tax return. She is covered under their health ins

> Go to the IRS Web site (www.irs.gov) and print Form 1040 and Schedule A. Using the information in problem 70, complete these forms to the extent possible.

> George owns 1,000 shares of ABC common stock and 3,000 shares of Brightstar mutual fund. George elects to participate in Brightstar’s dividend reinvestment plan, reinvesting his annual dividends and capital gains distributions in additional Brightstar sh

> Go to the IRS Web site (www.irs.gov) and print Form 1040 and Schedule A. Using the information in problem 69, complete these forms to the extent possible.

> In January, Susan’s employer transferred her from Chicago to Houston (where she continues to work for the remainder of the year). Her expenses were: Transportation for household goods………….$2,300 Airfare from Chicago to Houston……………………200 Pre-move house-h

> Go to the IRS Web site (www.irs.gov) and print Schedule A: Itemized Deductions. Using the following information, complete this form for Simon and Ellen, both age 48 and married filing jointly, who have adjusted gross income of $60,000. They paid the foll

> Go to www.irs.gov (the IRS Web site) and click on Careers under Work at IRS. Look under Resources, then under Job Descriptions, and finally look under Accounting, Budget & Finance to learn more about Internal Revenue Agent positions. a. If you are a rec

> Go to the IRS Web site (www.irs.gov). Print the first page of Form 1040 and compute Pierre Lappin’s adjusted gross income by entering the following information: $60,000 salary, $5,000 qualified dividend income, $3,000 interest income from corporate bonds

> Go to the IRS Web site (www.irs.gov) and print Form 2106: Employee Business Expenses. Use the following information to complete this form. Carl is an employee of Intelligent Devices, Inc. in San Jose. In a typical week, Carl spends the majority of his

> Jordan (SSN 150-66-7788) and Diana (SSN 15067-4321) Diego are a married couple who reside at 111 Coral Drive in Miami, FL 33156. They have one dependent daughter, Emily (SSN 155-88-4321), age 18, who lives at home. Jordan is a manager at Big Box Corpor

> Go to the IRS Web site (www.irs.gov) and print Schedule C: Profit or Loss for Business (Sole Proprietorship), Schedule SE: Self-Employment Tax, and Form 8829: Expenses for Business Use of Your Home. Use the information in problem 47 to complete these for

> Go to the IRS Web site (www.irs.gov) and print the page of Form 1120: U.S. Corporate Income Tax Return that includes Schedule M-1. Use the information in example 6.42 to complete Schedule M-1.

> Go to the IRS Web site (www.irs.gov) and print Schedule E: Supplemental Income and Loss. Use the following information to complete this form. Gillian Martin rented her vacation home in Telluride, Colorado for 60 days during the year receiving $6,900 in

> Carolyn has a 50 percent interest in a general partnership that has a $14,000 loss for the year. She materially participates in the partnership. Her basis in the partnership is $10,000. She also has salary from other employment of $46,000. If she is sing

> Go to www.irs.gov and print Form 1040 and Schedule SE. Complete the first page of Form 1040 and Schedule SE for Angelina Carlyle who is single. She reports $195,000 of net profit on her Schedule C from her sole proprietorship and $2,000 of taxable intere

> Kondex, a cash-basis corporation, is considering paying $50,000 of expenses at the end of this year rather than waiting until next year. Kondex’s marginal tax rate for the current year is 25 percent but it expects to be in the 34 percent marginal tax bra

> On December 1, year 1, Peak Advertising (a calendar-year, accrual-basis taxpayer) received a $24,000 retainer fee for a two-year service contract. a. How much income should Peak report in year 1 for tax and financial accounting? b. How much income shoul

> Sorbon Corporation pays federal income tax at a 34 percent rate. In year 1, Sorbon deducts $80,000 as bad debt expense in computing its book income but deducts only $70,000 for bad debt expense on its tax return. a. What is the difference between Sorbon

> Noah, a single parent, estimated his income tax liability would be $8,000. He made estimated tax payments of $6,900 during the year. Noah also determined that he is entitled to claim a child tax credit of $1,000. What is Noah’s tax due?

> Diana, a single individual, has regular taxable income of $220,000 and alternative minimum taxable income of $350,000. a. What is Diana’s tentative minimum tax? b. What is Diana’s AMT?

> Lenora and Sam are married and file a joint tax return. Lenora has $180,000 in salary and Sam has $190,000 in self-employment income in 2017. How much must they pay for their additional Medicare surtax?

> Andrew, a single individual, has $220,000 in salary and $60,000 in self-employment income in 2017. How much must he pay for his additional Medicare surtax?

> Roland worked for Sorbonne Company for the first four months of 2017 and earned $40,000 from which his employer withheld $3,060 for payroll taxes. In May, Roland accepted a job with Lyon Company. During the last eight months of the year, Roland earned $9

> June is a single individual with AGI of $45,000 for the year. June has a five-year-old son in day care while she works. a. What is her dependent care credit if she spends $5,000 for child care during the year? b. What is her dependent care credit if sh

> Hunter Corporation has $250,000 in gross income, $125,000 in deductible business expenses, and a $12,000 business tax credit. Determine the corporation’s net tax liability.

> Doris is a single individual with modified AGI of $57,000. During the year, she paid $11,000 tuition for a master’s in taxation program. How much can Doris claim for the lifetime learning credit?

> Greg and Barbara, a married couple with an AGI of $80,000, have three children who are full-time college students. They pay $6,000 for tuition annually for each child. One son is a sophomore in college and the other son is a senior. Their daughter is a

> Cindy files as head of household and has three dependent children ages 12, 14, and 16. Her AGI is $80,000. How much can Cindy claim for the child tax credit?

> Kevin is an employee of One Hour Dry Cleaners, Inc. All employees of One Hour are eligible for a 40 percent discount on their dry cleaning. During the year, Kevin paid $300 for cleaning that normally would have cost $500. Does Kevin have any taxable inco

> Elena is single but her mother, Maria, lives with her. Maria’s sole income is $7,000 in Social Security (which she saves for unexpected medical expenses) and $500 of interest income on that account. Elena provided a room in her home for Maria that could

> Scott is 15 years old and qualifies as a dependent on his parents’ tax return. During 2017 he earns $2,500 from a part-time job and also receives $800 of dividend income on stock given to him by his aunt. What is Scott’s taxable income?

> Michael’s adjusted gross income for 2017 is $90,000. He is age 30 and single with no dependents. What is Michael’s taxable income?

> Joseph provides $12,000 of support for his mother, Miriam, who lives with him. Miriam is single and a U.S. citizen. Her only income is Social Security of $5,000 and taxable pension income of $4,200. Miriam uses the Social Security income for support but

> Suzanne, who is a head of household, has the following deductions before considering any phaseouts: Interest on qualified acquisition debt………$9,800 Real property taxes…………………………………..3,000 State income taxes……………………………………5,000 Charitable contributions………

> Pablo and Adriana, a married couple who file a joint return, purchased a $190,000 home making a $38,000 cash down payment and taking out a mortgage for the balance of the purchase price. They also paid the mortgage company $3,000 in points for originatin

> Priscilla, an employee of Choice Corporation, has an annual salary of $70,000. Choice has a cafeteria plan that allows all employees to choose an amount equal to 8 percent of their annual salary from a menu of nontaxable fringe benefits or to take cash.

> Rebecca and Gregory, a married couple filing a joint return, reported adjusted gross income of $70,000 and total allowable itemized deductions of $13,000, including $3,100 for state income taxes, in 2017. They received a $900 refund of state income taxes

> Daniel’s adjusted gross income is $90,000. During the year he incurred $14,000 of medical expenses and was reimbursed for $3,000 of these expenses. What is his allowable medical expense deduction if he is age 45, single, and itemizes? If this is Daniel’s

> Lynn, age 66, is an unmarried individual who has a dependent grandchild who lives with her. What is Lynn’s standard deduction for 2017?

> Harry and Silvia, a married couple, are both age 67 and legally blind. What is their standard deduction for 2017?

> Clark works all year at the front desk of the Dew Drop Inn and earns a salary of $30,000. He is offered the option of a $400-per-month living allowance or rent-free use of a room at the inn. Clark chooses to live at the inn in a room that normally rents

> Cecilia is married and files a joint return with her husband, Steve. They have modified adjusted gross income of $140,000. Cecilia paid $2,700 in student loan interest this year. How much of this interest is deductible?

> Mark works in a foreign country for the entire calendar year. His salary is $120,000 and he pays $18,000 in tax to the foreign government. His other taxable income (from U.S. sources) after all deductions is $30,000. If he claims the foreign earned incom

> Luis operates a bakery as a sole proprietorship which generated $280,000 in net income. He has four bakers whom he employs on a full-time basis and who participate in a company-paid health insurance plan. Luis is also covered by this same plan. The annua

> Carrie owns a business that she operates as a sole proprietorship. The business had a net profit of $25,000 in 2017. This is Carrie’s only earned income. a. How much must she pay for self-employment taxes? b. How much can she deduct on her tax return?

> Larry has a scholarship to attend the local college. The scholarship provides $7,000 for tuition, books, and related expenses for the academic year. Larry only spent $3,200 for tuition, books, and related supplies from August through December of year 1 a

> Jennifer, age 35, is single and an active participant in her employer’s qualified retirement plan. Compute the maximum Roth IRA contribution that she can make in 2017 if a. her adjusted gross income is $135,000. b. her adjusted gross income is $59,000.

> Nick, age 53, is single and has AGI of $66,000. He contributes $5,000 to his IRA in 2017. a. How much can Nick deduct if he is not covered by an employer-sponsored qualified retirement plan? b. How much can Nick deduct if he is covered by an employer-s

> Giant Corporation (a U.S. corporation) formed Small Corporation in a foreign country. Giant owns 70% of Small Corporation’s stock and the remaining stock is owned by citizens of the country in which Small is located. This year Small Corporation earned $1

> Sara has a $5,500 per year scholarship to attend the state university. Sara spent $4,000 for tuition, $500 for required textbooks and $1,000 for room and board. Sara also had a part-time job on campus earning $3,000 that covered the balance of her room a

> Mark’s employer pays 55 percent of the premiums for a disability insurance policy and Mark pays for the other 45 percent. The policy pays Mark 65 percent of his normal salary in the event he is injured and cannot return to work for an extended period. Ma

> Jennifer elects to reduce her salary by $2,500 so she can participate in her employer’s flexible spending arrangement. Her salary reduction is allocated as follows: $1,700 for medical and dental expenses and $800 for child care expenses. During the year,

> Myra received a $20,000 gift from her cousin and inherited $80,000 in corporate bonds from her aunt at the beginning of the current year. Myra received $7,000 in interest income from the bonds at the end of the current year. How much does Myra include in

> Markum Corporation owes a creditor $60,000. Markum transfers property purchased four years ago for $45,000 to the creditor to satisfy the debt. The property is currently worth $60,000. Does Markum have any gross income as a result of this transaction?

> Mike was shopping in Produce Market when it was robbed. Mike suffered some injuries during the robbery and filed suit against Produce Market for not maintaining a secure environment for its customers. In an out-of-court settlement, Mike received $12,000

> Carl is a 30 percent partner in the CCF Partnership. At the beginning of the year, his basis in the partnership is $4,000. The partnership reports $7,000 of ordinary income and distributes $3,000 to the partners. What is Carl’s basis at the end of the ye

> John has taxable income of $30,000. William has taxable income of $60,000. Determine their 2017 income taxes if they are both single individuals and claim the standard deduction. Compare their incomes and their income taxes. What does this illustrate?

> Perform the calculation to prove that the 3 percent surtax on corporate income between $15,000,000 and $18,333,333 equals the benefit of the 34 percent tax rate on income of no more than $10,000,000.

> Refer to the information in problem 37. Determine Warner Corporation’s income tax liability. From problem 37: The Warner Corporation has gross income of $560,000. It has business expenses of $325,000, a capital loss of $20,000, and $2,500 of interest in

> Refer to the information in problem 36. Determine the corporation’s income tax liability. From problem 36: Determine a corporation’s taxable income if it has $450,000 of gross receipts, $145,000 cost of goods sold, $276,000 of deductible business expens

> John is a single individual who works for Auto Rental Cars in Japan during the entire calendar year. His salary is $140,000. How much of this salary can he exclude?

> Refer to the information in problem 35. Determine Marlee’s income tax liability for 2017. From problem 35: Marlee, a single parent of one child for whom she claims the exemption, has $15,000 in itemized deductions and files as head of household for 2017

> Refer to the information in problem 34. Determine Amy’s income tax liability for 2017. From problem 34: Determine Amy’s taxable income for 2017 if she has $40,000 of salary income, is single, and claims the standard deduction.

> Determine George and Mary’s taxable income and tax liability for 2017 if George has $65,000 and Mary has $45,000 of salary income, they have $24,000 of allowable itemized deductions, no dependents, and file a joint tax return.

> The Warner Corporation has gross income of $560,000. It has business expenses of $325,000, a capital loss of $20,000, and $2,500 of interest income on temporary investments. What is the corporation’s taxable income?

> Determine a corporation’s taxable income if it has $450,000 of gross receipts, $145,000 cost of goods sold, $276,000 of deductible business expenses, $20,000 of gain on the sale of machinery, and $500 of interest income from State of New York bonds.

> Marlee, a single parent of one child for whom she claims the exemption, has $15,000 in itemized deductions and files as head of household for 2017. Determine her taxable income if she has a salary of $71,000 and interest income of $1,500.

> Determine Amy’s taxable income for 2017 if she has $40,000 of salary income, is single, and claims the standard deduction.

> If a taxpayer has $140,000 of employee salary, how much will be withheld for the Social Security and Medicare taxes in 2017?

> If a taxpayer has $40,000 of employee salary in 2017, how much will be withheld for the Social Security and Medicare taxes?

> Dane City’s total assessed valuation for all of the property in its jurisdiction is $4,000,000,000. It needs $20,000,000 in revenue for the services it provides its citizens. Joe owns property that is assessed at $150,000. How much will he pay in propert

> Gaudy Gift Gallery Corporation (owned 100 percent by Barbara) operates a gift shop. Barbara employs her daughter, Jenny, after school and on weekends. Other employees with similar responsibilities are paid $7 per hour while Jenny earns $15 per hour. Jenn

> Melissa is an employee of Largo Corporation. In 2017 Melissa’s salary was $105,000 and she earned a bonus of $24,000. How much in Social Security and Medicare taxes must be paid by Largo Corporation and how much of these taxes can it deduct? How much Soc

> Explain the differences between the rules governing travel within the United States and those governing travel outside the United States.

> Diane owns and manages a successful clothing store in Dallas. She and her brother, Cameron, investigated the possibility of opening another store in Atlanta for Cameron to manage. Diane and Cameron each paid $1,600 in travel costs while looking for sites

> What records should a taxpayer be able to provide the IRS to substantiate a tax deduction?

> What is an investment activity and how are its expenses deducted?

> Explain the advantages and disadvantages of a publicly held company using LIFO for inventory valuation.

> What are the UNICAP rules, and which businesses do they affect?

> Explain the two-step evaluation process of FIN 48.

> Which corporations are required to file Schedule M-3? What is the purpose of this schedule?

> Differentiate permanent differences and temporary differences. Provide examples of each.

> What is a statute of limitations? What is its significance to taxpayers?

> What factors differentiate a hobby from an active business?

> What are the requirements for a self-employed person to claim a deduction for an office in the home? What are the additional requirements for an employee to take a home office deduction?

> What are the passive activity loss rules and how do they affect the deductibility of losses from rental property?

> How are deductions for expenses of rental property limited if the taxpayer also uses the property as a vacation home?

> What are the characteristics of a qualified trade or business?

> When would a taxpayer claim the standard deduction rather than itemizing deductions?

> Differentiate between an abandoned spouse and a surviving spouse.

> What is the purpose of the abandoned spouse provision?

> What are the requirements to file as head of household?

> What are the filing statuses available to unmarried taxpayers? Which statuses are available only to married taxpayers?

> Are there any restrictions on business use of the cash method of accounting? Explain.