Question: Cheryl incurred $8,700 of Medical expenses

> In choosing between taking the standard deduction and itemizing deductions from AGI, what effect, if any, does each of the following have? a. The age of the taxpayer(s). b. The health (i.e., physical condition) of the taxpayer. c. Whether taxpayers rent

> Tobias has a brokerage account and buys on the margin which resulted in an interest expense of $20,000 during the year. Income generated through the brokerage account was as follows: How much investment interest can Tobias deduct? Municipal interes

> C1assify each of the following expenditures paid in 2018 as a deduction for AGI, a deduction from AGI, or not deductib1e: a. Barak contributes to his H.R. 10 p1an (i.e., a retirement plan for a self-emp1oyed individual). b. Keith pays child support to hi

> Leonard's home was damaged by a fire. He also had to be absent from work for several days to make his home habitable. Leonard's employer paid Leonard his regular salary, $2,500, while he was absent from work. In Leonard's pay envelope was the following n

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

> Explain how an account receivable can give rise to a bad debt deduction.

> If depreciab1e equipment used in a business is sold at a recognized gain on July 10, 2018, and it was purchased on August 21, 2017, does § 1245 depreciation recapture apply to the asset? Explain.

> Steven established a sole proprietorship in 2012. He sold 1231 asset at a loss in 2016 and 2017. He had only sold § 1231 assets at a gain before 2016. In 2018, he cou1d sell a § 1231 asset at a gain and would like to have the gain taxed as a long-term ca

> An individual taxpayer had a net 1231 loss in 2018. Could any of this loss be treated as a long-term capital loss? Why or why not?

> Bernice, a sole proprietor, sold two business asset during the year. As a result, she has an ordinary loss and a § 1231 gain. The loss asset was office furniture that was held for eight months, and the gain asset is land that was held for five years. Why

> If there is a net loss from the sale of depreciable business property held long term, what is the character of the loss? How is it deducted (for or from AGI)?

> Complete the following statements regarding speω1 recapture provisions. a. Corporations selling depreciable real property are required to recapture as ordinary income the of two amounts: (1) % of the recognized gain or (2) % of the depreciation taken. b.

> The dividends received deduction (DRD) is a tax deduction that may be taken by which of the following? a. An individual b. An S corporation c. A partnership d. An C corporation

> Thomas receives tangible personal property as an inheritance from a decedent who died in 2018. The property was depreciated by the deceased, and Thomas will also depreciate it. At the date of the deceased's death, the property was worth more than the dec

> A retailer’s store is destroyed by a tornado but is insured for its replacement cost. Consequently, the retailer has a $40,000 gain after receiving the insurance proceeds. The store is not rep1aced because the retailer spends the insurance proceeds on ad

> A professional football player’s contract is sold at a gain after it has been held for two years. What issues should the team consider in determining the nature of this gain?

> Harriet, an organic farmer, has owned depreciable farm equipment for several years. Is the equipment a capital asset? Why or why not?

> Near the end of 2018 Byron realizes the has a net short-term capital loss of $13,000 for the year. Byron has taxable income (not including the loss) of $123,000 and is single. He owns numerous stocks that could be sold for a long-term capital gain. What

> Melissa owns a residential lot in Spring Creek, Louisiana, that has appreciated substantially in value. She holds the lot for investment. She is considering exchanging the lot for a residential lot located in Paris, France, that she also will hold for in

> Distinguish between a loss that is not recognized on a nontaxable exchange and a loss that is not recognized on the sale or exchange of a personal use asset.

> Bob is notified by the city public housing authority on May 3, 2018, that his apartment building is going to be condemned as part of an urban renewa1 project. On June 1, 2018, Carol offers to buy the building from Bob. Bob sells the building to Carol on

> Reba a calendar year taxpayer, owns an office building that she uses in her business. The building is invo1untarily converted on November 15, 2018. On January 5, 2019, Reba receives enough proceeds to produce a realized gain. What is the 1atest date she

> Ed receives severance damages from a state government for a public road built across his property. What are the tax implications of the severance damages?

> Barker acquired a 50% interest in Kode Partnership by contributing $20,000 cash and a building with an adjusted basis of $26,000 and a fair market value of $42,000. The building was subject to a $10,000 mortgage, which was assumed by Kode. The other part

> David is a CPA and enjoys playing the lottery. This year David won $10,000 in lottery scratch-off tickets. He spent $200 purchasing the tickets. Which statement is true regarding David's winnings? a. David must include $9,800 in gross income. b. David mu

> In most nontaxable exchanges, is the non recognition of the realized gain or loss temporary or permanent? Explain.

> On July 16, 2018, Logan acquires land and a building for $500,000 to use in his sole proprietorship. Of the purchase price, $400,000 is allocated to the building, and $100,000 is allocated to the land. Cost recovery of $4,708 is deducted in 2018 for the

> Comment on the following transactions: a. Mort owns 500 shares of Pear, Inc. stock with an adjusted basis of $22,000 On July 28, 2018, he sells 100 shares for $3,000. On August 16, 2018, he purchases another 100 shares for $3,400. Explain why Mort's real

> Thelma inherited land from Sadie on June 7, 2018. The land appreciated in value by 100% during the six months it was owned by Sadie. The value has remained stable during the three months Thelma has owned it, and she expect it to continue to do so in the

> Robin inherits $1,000 shares of Wal-Mart stock from her aunt in 2018. According to the information received from the executor of her aunt's estate, Robin's adjusted basis for the stock is $55,000. Albert, Robin's finance, receives 1,000 shares of Wal-Mar

> Upon the sale or other disposition of property, what four questions should be considered for income tax purposes?

> Elaborate rules exist that require employers to prepay various types of Federal taxes. Summarize the major issue that an employer must resolve if it is to comply with the requirements

> Individuals who receive substantial Social Security benefits are usually not eligible for the tax credit for the elderly or disabled because these benefits effectively eliminate the base upon which the credit is computed. Explain.

> Explain the purpose of the disabled access credit, and identify several examples of the type of structural changes to a building that qualify for the credit.

> Describe the two additional Medicare taxes that are assessed on high-income taxpayers.

> Adams, Beck, and Carr organized Flexo Corp. with authorized voting common stock of $100,000. Adams received 10% of the capital stock in payment for the organizational services that he rendered for the benefit of the newly formed corporation. Adams did no

> Describe the exposure (i.e., wage base and tax rate) that a self-employed individual has to the self-employment tax for 2018.

> Evaluate the validity of following statements: In a year of which depreciable personal property is sold at a gain, the amount of the AMT gain will differ from the regu1ar tax gain

> Tad, who owns and operates a business acquired machinery and placed it in service in June 2009. The machinery is 10-year property. Does Tad need to make an AMT adjustment in 2009 or 2018 for the depreciation on the machinery? Explain.

> Can any non refundable credits, other than the forgive tax credit, reducer the regular income tax liability below the amount of the TMT? Explain.

> AMT liability results if the tentative minimum tax (TMT) exceeds the regular income tax liability. What happens if the regular income tax liability exceeds the TMT? Does this create a negative AMT amount that can be carried to other years? Explain.

> In the calculation of AMTI, where is the adjustment for the standard deduction made and what is the reason for the adjustment?

> Matt, who is single, always has elected to itemize deductions rather than take the standard deduction. In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. Based on recent tax law changes and the fact th

> How is it possible that a taxpayer could have an AMT NOL larger than his or her alternative minimum taxable income (TMT), yet still have a positive tentative minimum tax (TMT) amount?

> Paola exercised an incentive stock option on March 1, 2018. She acquired 2,000 shares of stock at an exercise price of $3 per share when the fair market value of the stock was $15 per share. However, Paola was concerned that the stock was overvalued, so

> Celine is going to be subject to the AMT in 2018. She owns an investment building and is considering disposing of it and investing in other realty Based on an appraisal of the building's value, the realized gain would be $85,000. Ed has offered to purcha

> On February 1 of year 0, John received a nonqualified stock option to purchase 100 shares of his employer's stock for $10 per share. At the time John received the option, it was selling for $5 per share on an established exchange. On September 1 of year

> In 2005, Douglas purchased an office building for $500,000 to be used in his business. He sells the building in the current tax year. Explain whether his recognized gain or loss for regular income tax purposes will be different from his recognized gain o

> Jayden, a calendar year taxpayer paid $16,000 in Medical expenses and sustained a $20,000 casualty loss in 2018 (the loss occurred in a Federally declared disaster area). He expects $12,000 of the medical expenses and $14,000 of the casualty loss to be r

> 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.

> Amos began a business, Silver LLC (a single-member LLC), on July 1 2015. The business extracts and processes silver ore. During 2018, as a resu1t of a decline in demand for silver ore, Amos expects to generate a large loss. Identify the re1evant tax issu

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