Question: Cecil C. Seymour is a 64-year-

> Pam retires after 28 years of service with her employer. She is 66 years old and has contributed $42,000 to her employer’s qualified pension fund. She elects to receive her retirement benefits as an annuity of $3,000 per month for the remainder of her li

> Vito is the sole shareholder of Vito, Inc. He is also employed by the corporation. On June 30, 2017, Vito borrowed $8,000 from Vito, Inc., and on July 1, 2018, he borrowed an additional $10,000. Both loans were due on demand. No interest was charged on t

> Indicate whether the imputed interest rules should apply in the following situations. Assume that all of the loans were made at the beginning of the tax year unless otherwise indicated. a. Mike loaned his sister $90,000 to buy a new home. Mike did not ch

> Ridge is a generous individual. During the year, he made interest-free loans to various family members when the Federal rate was 3%. What are the tax consequences of the following loans by Ridge: a. On June 30, 2016, Ridge loaned $12,000 to his cousin, J

> Roy decides to buy a personal residence and goes to the bank for a $150,000 loan. The bank tells him that he can borrow the funds at 4% if his father will guarantee the debt. Roy’s father, Hal, owns a $150,000 CD currently yielding 3.5%. The Federal rate

> Alicia and Rafel are in the process of negotiating a divorce agreement. They both worked during the marriage and contributed an equal amount to the marital assets. They own a home with a fair market value of $400,000 (cost of $300,000) that is subject to

> Nell and Kirby are in the process of negotiating their divorce agreement. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement? a. In consideration for her one-half interest in thei

> Liz and Doug were divorced on December 31 of the current year after 10 years of marriage. Their current year’s income received before the divorce was as follows: Doug’s salary…………………………………………………………………………………………………$41,000 Liz’s salary………………………………………………………

> In 2017, Alva received dividends on her stocks as follows: Amur Corporation (a French corporation whose stock is traded on an established U.S. securities market)…………………………………………$60,000 Blaze, Inc., a Delaware corporation…………………………………………

> Where may private letter rulings be found?

> Faye, Gary, and Heidi each have a one-third interest in the capital and profits of the FGH Partnership. Each partner had a capital account of $50,000 at the beginning of the tax year. The partnership profits for the tax year were $270,000. Changes in the

> Troy, a cash basis taxpayer, is employed by Eagle Corporation, also a cash basis taxpayer. Troy is a full-time employee of the corporation and receives a salary of $60,000 per year. He also receives a bonus equal to 10% of all collections from clients he

> Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investment

> The Bluejay Apartments, a new development, is in the process of structuring its lease agreements. The company would like to set the damage deposits high enough that tenants will keep the apartments in good condition. The company is actually more concerne

> Freda is a cash basis taxpayer. In 2017, she negotiated her salary for 2018. Her employer offered to pay her $21,000 per month in 2018 for a total of $252,000. Freda countered that she would accept $10,000 each month for the 12 months in 2018 and the rem

> Drake Appliance Company, an accrual basis taxpayer, sells home appliances and service contracts. Determine the effect of each of the following transactions on the company’s 2017 gross income assuming that the company uses any available options to defer i

> Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2017 gross income: a. On September 30, 2017, she cashed in Series EE bonds f

> Determine the effects of the following on a cash basis taxpayer’s gross income for 2017 and 2018. a. On the morning of December 31, 2017, the taxpayer received a $1,500 check from a customer. The taxpayer did not cash the check until January 3, 2018. b.

> Trip Garage, Inc. (459 Ellis Avenue, Harrisburg, PA 17111), is an accrual basis taxpayer that repairs automobiles. In late December 2017, the company repaired Samuel Mosley’s car and charged him $1,000. Samuel did not think the problem had been fixed and

> Your client is a partnership, ARP Associates, which is an engineering consulting firm. Generally, ARP bills clients for services at the end of each month. Client billings are about $50,000 each month. On average, it takes 45 days to collect the receivabl

> The Adams Independent School District wants to sell a parcel of unimproved land that it does not need. Its three best offers are as follows: from the state’s Department of Public Safety (DPS), $2.3 million; from the Second Baptist Church, $2.2 million; a

> Selma operates a contractor’s supply store. She maintains her books using the cash method. At the end of the year, her accountant computes her accrual basis income that is used on her tax return. For 2017, Selma had cash receipts of $1.4 million, which i

> Al is a medical doctor who conducts his practice as a sole proprietor. During 2017, he received cash of $280,000 for medical services. Of the amount collected, $40,000 was for services provided in 2016. At the end of 2017, Al had accounts receivable of $

> Determine Amos’s gross income in each of the following cases: a. In the current year, Amos purchased an automobile for $25,000. As part of the transaction, Amos received a $1,500 rebate from the manufacturer. b. Amos sold his business. In addition to the

> Determine the taxpayer’s gross income for tax purposes in each of the following situations: a. Deb, a cash basis taxpayer, traded a corporate bond with accrued interest of $300 for corporate stock with a fair market value of $12,000 at the time of the e

> Harper is considering three alternative investments of $10,000. Assume that the taxpayer is in the 25% marginal tax bracket for ordinary income and 15% for qualifying capital gains in all tax years. The selected investment will be liquidated at the end o

> Determine the taxpayer’s current-year (1) economic income and (2) gross income for tax purposes from the following events: a. Sam’s employment contract as chief executive of a large corporation was terminated, and he was paid $500,000 not to work for a c

> For a person who receives Social Security benefits, what effect, if any, can an increase in other income have on that person’s taxable income?

> The divorce agreement 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?

> The taxpayer performs services with payment due from the customer within 30 days. All customers pay within the time limit. What would be the benefit to the taxpayer using the cash method of accounting rather than the accrual method?

> On December 29, 2017, an employee received a $5,000 check from her employer’s client. The check was payable to the employer. The employee did not remit the funds to the employer until December 30, 2017. The employer deposited the check on December 31, 20

> Sally Andrews calls you on the phone. She says that she has found a 2007 letter ruling that agrees with a position she wants to take on her tax return. She asks you about the precedential value of a letter ruling. Draft a memo for the tax files outlining

> Ben lost his job when his employer moved its plant. During the year, he collected unemployment benefits for three months, a total of $1,800. While he was waiting to hear from prospective employers, he painted his house. If Ben had paid someone else to pa

> Compare and contrast the economist’s concept used to recognize income with the concept employed in measuring taxable income.

> Connor purchased an annuity that was to pay him a fixed amount each month for the remainder of his life. He began receiving payments in 2001, when he was 65 years old. In 2017, Connor was killed in an automobile accident. What are the effects of the annu

> In the current year, the Rose Corporation made a $400,000 interest-free loan to John Rose, the corporation’s controlling shareholder. Mr. Rose is also the corporation’s chief executive officer and receives a salary of $300,000 a year. What are the tax co

> Patrick and Eva are planning to divorce. Patrick has offered to pay Eva $12,000 each year until their 11-year-old daughter reaches age 21. Alternatively, Patrick will transfer to Eva common stock that he owns with a fair market value of $100,000. What fa

> William and Abigail, who live in San Francisco, have been experiencing problems with their marriage. They have a 3-year-old daughter, April, who stays with William’s parents during the day because both William and Abigail are employed. Abigail worked to

> Rex became a partner with a 30% interest in the partnership profits when he invested $200,000. In 2017, the partnership generated $400,000 of taxable income, and Rex withdrew $100,000. In 2018, the partnership had $600,000 of taxable income, and Rex with

> Anita, a cash basis taxpayer, sued her former employer for wage discrimination. Her attorney agreed to pursue the case on a contingent fee basis—the attorney would receive one-third of any settlement or court award. The parties reached a settlement, and

> Wade paid $7,000 for an automobile that needed substantial repairs. He worked nights and weekends to restore the car and spent $2,400 on parts for it. He knows that he can sell the car for $13,000, but he is very wealthy and does not need the money. On t

> A Series EE U.S. government savings bond accrues 3.5% interest each year. The bond matures in three years, at which time the principal and interest will be paid. The bank will pay the taxpayer at a 3.5% interest rate each year if he agrees to leave money

> Several years ago Ethan purchased the former parsonage of St. James Church to use as a personal residence. To date, Ethan has not received any ad valorem property tax bills from either the city or the county tax authorities. a. What is a reasonable expla

> What is the purpose of the constructive receipt doctrine?

> Howard buys wrecked cars and stores them on his property. Recently, he purchased a 1990 Ford Taurus for $400. If he can sell all of the usable parts, his total proceeds from the Taurus will be over $2,500. As of the end of the year, he has sold only the

> Allen visits Reno, Nevada, once a year to gamble. This year his gambling loss was $25,000. He commented to you, “At least I didn’t have to pay for my airfare and hotel room. The casino paid that because I am such a good customer. That was worth at least

> According to the Supreme Court, would it be good tax policy to use income as computed by financial accounting principles as the correct measure of income for Federal income tax purposes? Explain.

> An employer provides all of his employees with life insurance protection equal to twice the employee’s annual salary. Melba, age 42, has an annual salary of $70,000. Is Melba required to recognize income even though she is still alive at the end of the y

> Daniel B. Butler and Freida C. Butler, husband and wife, file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan’s Social Security number is 111-11-1112, and Freida’s is 123-45-6789. Dan was bo

> Compute the taxable Social Security benefits in each of the following situations: a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $46,000, no tax-exempt interest, and $12,400 of Social Security benefits. b

> A taxpayer, age 64, purchases an annuity from an insurance company for $50,000. She is to receive $300 per month for life. Her life expectancy is 20.8 years from the annuity starting date. Assuming that she receives $3,600 this year, what is the exclusio

> Elizabeth made the following interest-free loans during the year. Assume that tax avoidance is not a principal purpose of any of the loans. Assume that the relevant Federal rate is 5% and that the loans were outstanding for the last six months of the yea

> Interpret each of the following citations: a. Temp.Reg. § 1.956–2T. b. Rev.Rul. 2012–15, 2012–23 I.R.B. 975. c. Ltr.Rul. 200204051.

> Casper and Cecile are divorced this year. As part of the divorce settlement, Casper transferred stock to Cecile. Casper purchased the stock for $25,000, and it had a market value of $43,000 on the date of the transfer. Cecile sold the stock for $40,000 a

> Simba and Zola are married but file separate returns. Simba received $80,000 of salary and $1,200 of taxable dividends on stock he purchased in his name and paid from the salary that he earned since the marriage. Zola collected $900 in taxable interest o

> Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2017, Bigham sold the following customer contracts: Length

> On January 1, 2017, Kunto, a cash basis taxpayer, pays $46,228 for a 24- month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $50

> Kathy and Brett Ouray married in 1999. They began to experience marital difficulties in 2013 and, in the current year, although they are not legally separated, the couple considers themselves completely estranged. They have contemplated getting a divorce

> John and Janet Baker are married and maintain a household in which the following persons live: Calvin and Florence Carter and Darin, Andrea, and Morgan Baker. • Calvin and Florence are Janet’s parents, who are retired. During the year, they receive $19,0

> Each year, Tom and Cindy Bates report itemized deductions of $10,000, including a $4,000 pledge payment to their church. Upon the advice of a friend, they do the following: in early January 2017, they pay their 2016 pledge; during 2017, they pay the 2017

> During the year, Chester incurred the following transactions involving capital assets. Gain on the sale of an arrowhead collection (acquired as an investment at different times but all pieces have been held for more than one year)…………………… $ 6,000 Loss o

> During the year, Inez recorded the following transactions involving capital assets. Gain on the sale of unimproved land (held as an investment for 3 years)……………$ 3,000 Loss on the sale of a camper (purchased 2 years ago and used for family vacations)………

> Terri, age 16, is claimed as a dependent on her parents’ 2017 Federal income tax return. During the year, Terri earned $5,000 in interest income and $3,000 from part-time jobs. a. What is Terri’s taxable income? b. How much of Terri’s income is taxed at

> Distinguish between taxes that are proportional and those that are progressive.

> Paige, age 17, is claimed as a dependent on her parents’ 2017 Federal income tax return, on which they report taxable income of $120,000 (no qualified dividends or capital gains). Paige earned $3,900 pet sitting and $4,100 in interest on a savings accoun

> Taylor, age 18, is claimed as a dependent by her parents. For 2017, she records the following income: $4,000 wages from a summer job, $1,800 interest from a money market account, and $2,000 interest from City of Boston bonds. a. What is Taylor’s taxable

> Roy and Brandi are engaged and plan to get married. Roy is a full-time student and earns $9,000 from a part-time job. With this income, student loans, savings, and nontaxable scholarships, he is self-supporting. For the year, Brandi is employed and repor

> Which of the following individuals are required to file a 2017 Federal income tax return? Should any of these individuals file a return even if filing is not required? Why or why not? a. Patricia, age 19, is a self-employed single individual with gross i

> Use the Tax Rate Schedules to compute Morgan’s 2017 Federal income tax liability. Morgan (age 45) is single and provides more than 50% of the support of Rosalyn (a family friend, age 36), Flo (a niece, age 18), and Jerold (a nephew, age 18). Both Rosalyn

> Using the Tax Rate Schedules, compute the 2017 tax liability for Charlotte. Charlotte (age 40) is a surviving spouse and provides all of the support of her four minor children, who live with her. Charlotte also maintains the household in which her parent

> Walter and Nancy provide 60% of the support of their daughter Irene (age 18) and son-in-law John (age 22). John is a full-time student at a local university, while Irene holds various part-time jobs from which she earns $11,000. Walter and Nancy engage y

> Nadia died in 2016 and is survived by her husband, Jerold (age 44); her married son, Travis (age 22); and her daughter-in-law, Macy (age 18). Jerold is the executor of his wife’s estate. He maintains the household where he, Travis, and Macy live, and Jer

> Christopher died in 2015 and is survived by his wife, Chloe, and their 18- year-old son, Dylan. Chloe is the executor of Christopher’s estate and maintains the household in which she and Dylan live. All of their support is furnished by

> In each of the following independent situations, determine Winston’s filing status. Winston is not married. a. Winston lives alone, but he maintains a household in which his parents live. The mother qualifies as Winston’s dependent, but the father does n

> Rank the following items from the lowest to highest authority in the Federal tax law system: a. Interpretive Regulation. b. Legislative Regulation. c. Letter ruling. d. Revenue Ruling. e. Internal Revenue Code. f. Proposed Regulation.

> Wesley and Myrtle (ages 90 and 88, respectively) live in an assisted care facility and for the last two years received their support from the following sources. Percentage of Support Social Security benefits……………….…………………………………………..16% Son……………………

> Sam and Elizabeth Jefferson file a joint return. They have three children, all of whom qualify as dependents. If the Jeffersons report 2017 AGI of $335,900, what is their allowable deduction for personal and dependency exemptions?

> Jenny, age 14, lives in a household with her father, uncle, and grandmother. The household is maintained by the uncle. The parties, all of whom file their own Federal income tax returns, report AGI as follows: father ($30,000), uncle ($50,000), and grand

> Determine how many personal and dependency exemptions are available in each of the following independent situations. Specify whether any such exemptions would come under the qualifying child or the qualifying relative category. a. Andy maintains a househ

> Determine the number of personal and dependency exemptions in each of the following independent situations. No tax treaty provisions apply. a. Reginald, a U.S. citizen and resident, contributes 100% of the support of his parents, who are citizens of Cana

> Donna does not think she has an income tax problem but would like to discuss her situation with you just to make sure there is no unexpected tax liability. Base your suggestions on the following relevant financial information: a. Donna’s share of the SAT

> Determine the number of personal and dependency exemptions in each of the following independent situations. a. Leo and Amanda (ages 48 and 46, respectively) are married and furnish more than 50% of the support of their two children, Elton (age 18) and Tr

> Go to the U.S. Tax Court website (www.ustaxcourt.gov). a. What different types of cases can be found on the site? b. What is a Summary Opinion? Find one. c. What is a Memorandum Opinion? Find one

> Analyze each of the characteristics in considering the indicated test for dependency as a qualifying child or qualifying relative. For each of the last two columns, state whether the test is Met, Not Met, or Not Applicable (NA). Qualifying Child Tes

> (1) Go to www.taxalmanac.org, and use the website to find § 61(a). What is defined in this Code Section? Is the definition broad or narrow? (2) Go to www.legalbitstream.com, and find the case in which Mark Spitz, the former Olympic gold medalist, is the

> Jane, a tax practitioner, has reviewed the law on how State X’s income tax applies to a client’s web-based consulting business, but is unable to reach a conclusion for which she has a high level of confidence. Assuming Jane is a knowledgeable and experie

> Determine the amount of the 2017 standard deduction allowed in the following independent situations. In each case, assume that the taxpayer is claimed as another person’s dependent. a. Curtis, age 18, reports income as follows: $700 interest from a certi

> You are interviewing a client before preparing his tax return. He indicates that he did not list as income $96,000 received as a recovery for false imprisonment. What should you do with respect to this significant recovery? Partial list of research aids:

> Compute Aiden’s 2017 taxable income on the basis of the following information. Aiden is married but has not seen or heard from his wife for over three years. Salary ……………………………………………………………………………………………………………$ 80,000 Interest on bonds issued by City of Bo

> When Oprah gave away Pontiac G6 sedans to her TV audience, was the value of the cars taxable? On Labor Day weekend in 2006, World Furniture Mall in Plano, Illinois, gave away $275,000 of furniture because the Chicago Bears shut out the Green Bay Packers

> Compute Emily’s 2017 taxable income on the basis of the following information. Her filing status is single. Salary………………………………………………………………………………………………………………. $85,000 Interest income from bonds issued by Xerox………………………………………………………. 1,100 Alimony pa

> Research Problem 1. Determine the missing data in these court decisions and rulings. a. Higgens v. Comm., 312 U.S._____ (1941). b. Talen v. U.S., 355 F.Supp.2d 22 (D.Ct. D.C., ______). c. Rev.Rul. 2008–18, 2008–13 I.R.B.______. d. Pahl v. Comm., 150 F.3d

> Compute 2017 taxable income in each of the following independent situations. a. Drew and Meg, ages 40 and 41, respectively, are married and file a joint return. In addition to four dependent children, they have AGI of $65,000 and itemized deductions of $

> Using the legend provided, classify each of the following statements: a. Sue writes a $707 check for a charitable contribution on December 28, 2017, but does not mail the check to the charitable organization until January 10, 2018. She takes a deductio

> Several years ago, after a particularly fierce argument, Fran’s husband moved out and has not been heard from or seen since. Because Fran cannot locate her husband, she uses a “married, filing separate” income tax return. Comment on Fran’s Federal filing

> Using the legend provided, classify each of the following citations as to publisher: a. 83–2 USTC {9600. b. 52 AFTR 2d 83–5954. c. 67 T.C. 293 (1976). d. 39 TCM 32 (1979). e. 416 U.S. 938. f. RIA T.C. Memo. {80,582.

> In the citation Notice 90–20, 1990–1 C.B. 328, to what do the 20 and the 328 refer?

> Peter maintains a household in which live his 18-year-old son Kip and Kip’s wife Kerry. Although Peter provides most of their support, he does not claim them as dependents because Kip and Kerry file a joint return. Is Peter correct? Explain.

> Using the legend provided, classify each of the following tax sources: a. Sixteenth Amendment to the U.S. Constitution. b. Tax treaty between the United States and India. c. Revenue Procedure. d. An IRS publication. e. U.S. District Court decision. f.

> Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2014. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. For 2016, he reported the following receipts. In 2016, Logan inherited securit