Question: Amos began a business, Silver LLC (a

> William, a high school teacher, earns about $50,000 each year. In December 2018, he won $1 million in the state lottery. William plans to donate $100,000 to his church. He has asked you, his tax adviser, whether he should donate the $100,000 in 2018 or 2

> In connection with the office in the home deduction, comment on the following: a. The exclusive use requirement. b. The distinction between direct and indirect expenses. c. The effect of the taxpayer's work status (i.e., emp10yed or se1 f-emp1oyed) on th

> In each of the following situations, indicate whether the 50% reduction for meals applies. a. Each year, the employer awards its top salesperson an all-expense-paid trip to Jamaica. b. The employer has a cafeteria for its employees where meals are furnis

> In connection with 222 (deduction for qualified tuition and related expenses), comment on the relevance of the following: a. The standard deduction is claimed. b. Enro11ment at a college does not require the payment of a student activity fee c. Miscellan

> Jamie has an undergraduate degree in finance and is employed full-time by a bank. She is taking courses at a local university leading to an MBA degree a. Is the full cost of this education deductible to her? b. If so, what limitations are imposed on the

> Dr. Werner is a full-time professor of accounting at Pelican University. During the year, he teaches continuing education programs for CPA groups in several cities. He also serves as an expert witness in numerous lawsuits involving accounting fraud. Comm

> In 2016. Emma purchased an automobile, which she uses for both business and personal purposes. Although Emma does not keep records as to operating expenses (e.g., gas, oil, and repairs), she can prove the percentage of business use and the miles driven e

> On March 1 of year 0, Judy was granted an incentive stock option (ISO) to purchase 50 shares of her employer's stock for $10 per share. The FMV of the stock on the date of the grant was $12 per share. On May 1 of year 1, Judy exercised her option when th

> Milton is a resident of Mobile (Alabama) and is employed by Scaup Corporation. Because Scaup closed its Mobile office, Milton no longer has any nondeductible commuting expenses although he continues to work for Scaup. Explain why

> What tax return reporting procedures must be followed by an employee under the following circumstances? a. Expenses and reimbursements are equal under an accountable plan. b. Reimbursements at the appropriate Federal per diem rate exceed expenses, and an

> Regarding the tax implications of various retirement plans, comment on the following: a. The difference between Keogh (H.R. 10) and traditional deductible IRA p1ans. b. The difference between traditional IRA and Roth IRA plans

> Define each of the following terms, and exp1ain how each is used in determining the QBI deduction: a. Modified taxab1e income b. Qua1的ed business income. c. Qualified trade or business. d. "Specified services" business.

> What are the general rules surrounding the QBI deduction? How is it computed?

> Who can claim the qualified business income (QBI) deduction?

> Review the advantages and disadvantages of the Simplified Method for determining the office in the home deduction. Create a brief summary of your findings, and e-mail it to your instructor.

> Sophia and Jacob are married and file a joint return. Their 2017 tax return included a Form 2106 (Employee Business Expenses) for each of them Their 2018 tax return, however, included a Schedule C. In terms of employment status, what could have changed?

> Jim owns a very large ranch. A large part of his business is the production and raising of breeding cattle. Jim understands that he is entitled to use MACRS cost recovery on breeding cattle. Identify the relevant tax issues for Jim with respect to taking

> Robert purchased and placed in service $100,000 of 7-year class assets on August 10 of the current year. He also purchased and placed in service $500,000 of 5-year class assets on November 15 of the current year. He does not claim any available additiona

> Ryan is 39 years old and works as a real estate agent. Ryan's marginal tax rate is 24%. Ryan has a traditional (deductible) IRA with a current balance of $80,000. The IRA consists of $60,000 of contributions that Ryan made and deducted on his tax return

> Discuss the computation of cost recovery in the year of sale of an asset when the mid-quarter convention is being used.

> Discuss the computation of cost recovery in the year an asset is placed in service when the mid-quarter convention is being used.

> Identify the three factors reflected in the MACRS tables when the amount of cost recovery is determined.

> At the beginning of current year, Henry purchased a ski resort for $10 million. Henry does not own the land on which the resort is located. The Federal government owns the land, and Henry has the right to operate the resort on the land pursuant to Specia

> Discuss whether land improvements used in a trade or business are eligible for cost recovery.

> Discuss how the cost of material rights enters into the calculation of cost depletion.

> Discuss the difference between personal property and personal use property.

> In May 2018, George began searching for a trade or business to acquire. In anticipation of finding a suitable acquisition, George hired an investment banker to evaluate three potential businesses. He also hired a law firm to begin drafting regulatory app

> Harold and Bart own 75% of the stock of Orange Motors. The other 25% of the stock is owned by Jeb. Orange Motors entered into an agreement with Harold and Bart to acquire all of their Orange stock. In addition, Harold and Bart signed a non compete agreem

> Explain the amortization period of a § 197 intangible if the actual useful life is less than 15 years.

> Bert Johnson, a sole proprietor with no employees, has a Keogh profit sharing plan to which he may contribute 25% of his annual earned income. For this purpose, “earned income" is defined as net self-employment earnings reduced by the: a. deductible Keog

> Discuss the tax consequences if the business use percentage of listed property falls to 50% or lower after the year the property is placed in service.

> Discuss how the limits on cost recovery apply to listed property.

> A professional consulting business sells professional tools and equipment and provides associated services, such as repair and maintenance, to its customer base. The company's employees include technicians who are required to provide and maintain their o

> Discuss the definition of taxable income as it is used in limiting the § 179 expensing amount.

> Discuss the treatment of a § 179 expensing carry forward.

> Explain how the § 179 immediate expensing deduction affects the computation of MACRS cost recovery.

> Discuss when § 179 expense must be recaptured.

> Discuss whether property that is classified as personal use is subject to cost recovery.

> The value of Terrah's personal residence has declined significantly because of a recent forest fire in the area where she lives. The fire was a Federally declared disaster. Terrah's house suffered no actual damage during the fire, but because much of the

> Jim discovers that his residence has extensive termite damage. Discuss whether he may take a deduction for the damage to his residence.

> It is 2017. Bob and Nancy are married and file a joint return. They are both under age 50 and employed, with wages of $50,000 each. Their total AGI is $110,000. Neither of them is an active participant in a qualified plan. What is the maximum traditional

> Discuss the tax treatment of the sale of 1244 stock at a gain

> Sean is in the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. The bond is currently worth only $50,000. Discuss whether Sean can take a $150,000 loss for a business bad debt or for a worthl

> Discuss the treatment of a business bad debt when the business also has long-term capital gains.

> Discuss when a bad debt deduction can be taken for a nonbusiness debt.

> Ron, a cash basis taxpayer, sells his business accounts receivable of $100,000 of Felicia for $70,000 (70% of the actual accounts receivable). Discuss the amount and classification of Ron's bad debt deduction.

> Discuss whether the deductions for AGI can be treated as nonbusiness deductions in computing an individual's NOL.

> Discuss whether unreimbursed employee business expenses can create an NOL for an individual taxpayer.

> Discuss the rationale behind the excess business loss provision.

> Discuss under what circumstances a company would elect to amortize research and experimental expenditures rather than use the expense method.

> Paula has sales that qualify to be reported on the installment basis. In year 2, installment sales were $40,000 with a cost of $30,000. In year 3, installment sales were $50,000 with a cost of $25,000. Collections in year 2 were in the amount of $30,000.

> Kelly decided to invest in Lime, Inc, common stock after reviewing Lime,s public disclosures， including recent financial statements and a number of process releases issued by Lime. On August 7, 2016, Kelly purchased 60,000 shares of Lime for $210,000. In

> In 2018, Kelsey sustained a loss on the theft of a painting. She had paid $20,000 for the painting, but it was worth $40,000 at the time of the theft. Evaluate the tax consequences of treating the painting as investment property or as personal use proper

> Discuss the circumstances under which the cost of repairs to the damaged property can be used to measure the amount of a casualty loss.

> Discuss at what point in time a theft loss generally is recognized.

> Dave uses the second floor of a building for his residence and the first floor for his business. The uninsured building is destroyed by fire. Are the tax consequences the same for each part of the building? Explain.

> In March 2018, Jim asks you to prepare his Federal income tax returns for tax years 2015, 2016, and 2017. 1n discussing this matter with him, you discover that he also has not filed for tax year 2014. When you mention this fact, Jim tells you that the st

> For tax year 2015, the IRS assesses a deficiency against David for 5000,000. Disregarding the interest component, what is David's penalty if the deficiency is attributable to: a. Negligence? b. Fraud?

> In a determination of whether a business expense is deductible the reasonableness requirement applies only to salaries. Evaluate this statement.

> Nanette is a first-grade teacher. Potential deductions are charitable contribution of $800, personal property taxes on her car of $240, and various supplies purchased for use in her classroom of $225 (none reimbursed by her school). How will these items

> Brianna, a calendar year taxpayer, files her income tax return for 2017 on February 3, 2018. Although she makes repeated inquiries, she does not receive her refund from the IRS until May 28, 2018. Is Brianna entitled to interest on the refund? Explain.

> Wally, Inc., sold the following three personal property assets in year 6: What is Wally's net Section 1231 gain or loss in year 6? a. $500 loss b. $700 loss c. $1,200 loss d. $1,200 gain Asset Purchase Date Cost Accumulated Depreciation Selling Pri

> Regarding the statute of limitations on additional assessments of tax by the IRS, determine the applicable period in each of the following situations. Assume a calendar year individual with no fraud or substantial omission involved. a. The income tax ret

> In 2018, Larry and Susan each invest $10,000 in separate investment activities They each incur deductible expenses of $800 associated with their respective investments. Explain why Larry's expenses might not be deductible and Susan's expenses might be ap

> Aldo has just been audited by them He does not agree with the agent's findings but believes that he has only two choices: pay the proposed deficiency or resort to the courts. Do you agree with Aldo's conclusion? Why or why not?

> Classify each of the following expenditures paid in 2018 as a deduction for AGI, a deduction from AGI, or not deductible: a. Roberto gives cash to his father as a birthday gift. b. Sandra gives cash to her church. c. Albert pays Dr. Dafashy for medical s

> What is the primary purpose of effective tax planning? Explain

> Lavinia incurs various legal fees in obtaining a divorce. Which types of expenses associated with the divorce are deductible by Lavinia, and which are not?

> Blaze operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for a market analysis. Based on the different tax consequences lis

> Angelo, an agent for an airline manufacturer, is negotiating a sale with a representative of the US government and with a representative of a developing country. Angelo's company has sufficient capacity to handle only one of the orders. Both orders will

> Aubry, a cash basis and calendar year taxpayer, decides to reduce his taxable income for 2018 by buying $65,000 worth of supplies for his business on December 27, 2018. The supplies will be used up in 2019. a. Can Aubry deduct the expenditure for 2018? E

> What is the actually “paid requirement” for the deduction of an expense by a cash basis taxpayer? Does actual payment ensure a deduction? Explain.

> Jerry uses a building for business purposes. The building was purchased on April 1, year 3, for $124,000. It was sold on October 3, year 6, for $200,000. Accumulated depreciation as of the date of sale was $14,000, $4,000 of which was in excess of straig

> Ralph has experienced financial difficulties as a result of his struggling business. He has been behind on his mortgage payment for the last six months. The mortgage holder, who is a friend of Ralph's, has offered to accept $80,000 in full payment of the

> Dolly is a cash basis taxpayer. In 2018, she filed her 2017 South Carolina income tax return and received a $2,200 refund. Dolly took the standard deduction on her 2017 Federal income tax return, but will itemize her deductions in 2018. Molly, a cash bas

> Eagle Life Insurance Company pays its employees $.30 per mile for driving their personal automobiles to and from work. The company reimburses each employee who rides the bus $100 a month for the cost of a pass. Tom collected $100 for his automobile milea

> Wilbur has been offered a job at a salary that would put him in the 24% marginal tax bracket. In addition to his salary, he would receive health insurance coverage. Another potential employer does not offer health insurance but has agreed to match the fi

> Ted works for Azure Motors, an automobile dealership. All employees can buy a car at the company's cost plus 2%. The company does not charge employees the $ 300 dealer preparation fee that nonemployees must pay. Ted purchased an automobile for $29,580 ($

> In May 2018, Hernando a resident of California, has his 2016 Federal income tax return audited by the IRS. An assessment of additional tax is made because he had inadvertently omitted some rental income. In October 2018, California audits his state retur

> What determines the appropriate Circuit Court of Appeals for a particular taxpayer?

> A divorce agreement entered into in 2017 requires Alice to pay her former spouse $50,000 a year for the next ten years. Will the payments qualify as alimony? Why or why not?

> In January 2018, Sonja deposited $20,000 in a bank in the Bahamas. She earned $500 interest income. She closed the account in December 2018. a. Is Sonya subject to the FBAR reporting requirement? b. Is the interest income taxable in the United States?

> During the year, Brandi had the following transactions: a long term capital gain from the sale of land, a short-term capital l0ss from the sale of stock, and a l0ng-term capital gain from the sale of a gun collection. a. How are these transactions treate

> Jerry uses a building for business purposes. The building was purchased on April1, year 3, for $124,000. It was sold on October 3, year 6, for $200,000. Accumu1ated depreciation as of the date of sa1e was $14,000, $4,000 of which was in excess of straigh

> Fred and Wilma were divorced in year 1 (before 2019). Fred is required to pay Wilma $12,000 of alimony each year until their child turns 18. At that time, the payment will be reduced to $10,000 per year. In year 3, in accordance with the divorce agreemen

> An appellate court will often become involved in fact-finding determination. Discuss the validity of this statement.

> Conner purchased an annuity that was to pay him a fixed amount each month for the remainder of his life. He began receiving payments in 2002, when he was 65 years old. In 2018, Connor was killed in an automobile accident. What are the effects of the annu

> In connection with the application of the kiddie tax comment on the following: a. The child has only earned income. b. The child has a modest amount of unearned income. c. The child is age 20, not a student, and not disabled. d. The child is married.

> Mario, who is single, is s US citizen and resident. He provides almost all of the support of his parents and two aunts, who are citizens and residents of Guatemala. Mario's parents and aunt are serious1y considering moving to and becoming residents of Me

> In many cases, a surviving spouse ultimately becomes a head of household for filing status purposes. Explain this statement.

> Comment on the availability of head-of-household filling status for 2018 in each of the following independent situations: a. Taxpayer lives al0ne but maintains the household of his parents. In July 2018, the parent use their savings to purchase a new BMW

> Oliver is a US citizen employed by a multinational corporation at its London office. Oliver is married to Regina a British citizen, and they reside in England. Regina receives substantial rent income from rea1 estate she owns in western Europe. a. Must O

> What are the differences between Technical Advice Memoranda (TAMs) and Technical Expedited Advice Memoranda (TEAMs)?

> Mark and Lisa were divorced in 2017. In 2018 Mark has custody of their children, but Lisa provides nearly all of their support. Who is entitled to claim the children as dependents?

> Sri is considering the IRS to find out whether a possible stock redemption would be a qualified stock redemption. Outline some relevant tax issues Sri faces in determining whether to request a letter ruling.

> Marsha exchanged land in Florida with an FMV of $52,700 and an adjusted basis of $60,000 for land in Iowa with an FMV of $57,700. Marsha also paid $5,000 cash in the transaction. What is Marsha's basis in the land received? a. $55,000 b. $57,700 c. $60,0

> Monique owns a building that she leases to an individual who operates a grocery store. Rent income is $10,000, and rental expenses are $6,000. On what Form 1040 schedule or schedules are the income and expenses reported?

> On December 29, 2018, an employee received a $5,000 check from her emp1oyer's client. The check was payable to the employer. The employee did not remit the funds to the employer until December 30, 2018 The employer deposited the check on December 31, 201

> Magda maintains the household that includes a son (age 30) and a cousin (age 28). She can claim the cousin as a dependent but not her son. Explain.

> In late December 2018, Gray Corporation (a calendar year C corporation) pledges a $ 50,000 donation to a local relief agency formed to fight AIDS in Africa. Although Gray's board of directors authorized the donation in 2018, the payment is not made until