Jane is a roofing contractor. Jane’s friend needed a new roof but did not have the cash to pay. Jane’s friend instead paid with a used truck that Jane could use in her roofing business. The truck had originally cost the friend $17,500 but it was gently used and only worth $6,000. Jane did not actually need the truck and ended up selling it to a used car dealer for $5,200 a few months later. Explain what amount of gross income Jane must recognize as a result of the truck payment and why.
> Mary paid $2,000 of state income taxes in 2018. The total sales tax she paid during 2018 was $4,500, which included $3,000 for the cost of a new car. How should Mary treat the taxes paid on her 2018 tax return?
> Mike sells his home to Jane on April 2, 2018. Jane pays the property taxes covering the full calendar year in October, which amount to $2,500. How much may Mike and Jane each deduct for property taxes in 2018? Mike’s deduction $ Jane’s deduction $
> Lyndon’s employer withheld $11,000 in state income taxes from Lyndon’s wages in 2018. Lyndon obtained a refund of $1,700 this year for overpayment of state income taxes for 2017. State income taxes were an itemized deduction on his 2017 return. His 2018
> Rob operates a small plumbing supplies business as a sole proprietor. In 2018, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had been held
> Evan participates in an HSA carrying family coverage for himself, his spouse, and two children. In 2018, Evan has $100 per month deducted from his paycheck and contributed to the HSA. In addition, Evan makes a one-time contribution of $2,000 on April 15,
> Dick owns a house that he rents to college students. Dick receives $800 per month rent and incurs the following expenses during the year: Dick purchased the house in 1978 for $48,000. The house is fully depreciated. Calculate Dick’
> On July 1, 2018, Ted, age 73 and single, sells his personal residence of the last 30 years for $368,000. Ted’s basis in his residence is $42,000. The expenses associated with the sale of his home total $22,000. On December 15, 2018, Ted purchases and occ
> Larry Gaines, a single taxpayer, age 42, sells his personal residence on November 12, 2018, for $148,000. He lived in the house for 7 years. The expenses of the sale are $9,000, and he has made capital improvements of $7,000. Larry’s cost basis in his re
> In 2018, Michael has net short-term capital losses of $1,500, a net long-term capital loss of $27,000, and other ordinary taxable income of $45,000. a. Calculate the amount of Michael’s deduction for capital losses for 2018. b. Calculate the amount and
> Business with gross receipts of $25 million or less may treat inventory as non incidental materials and supplies. Find Regulation Section 1.162-3 and read paragraphs (a)(1) and (a)(2) to help answer the following: Frank owns an auto repair shop that serv
> Indicate the date that the statute of limitations would run out on each of the following 2018 individual tax returns: a. A fraudulent tax return that was filed April 15, 2019 b. A tax return that was filed May 19, 2019 c. A tax return that was filed Febr
> In 2018, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the foll
> During the 2018 tax year, Brian, a single taxpayer, received $7,400 in Social Security benefits. His adjusted gross income for the year was $14,500 (not including the Social Security benefits) and he received $30,000 in tax-exempt interest income and has
> In 2018, Van receives $20,000 (of which $4,000 is earnings) from a qualified tuition program. He uses the funds to pay for his college tuition and other qualified higher education expenses. How much of the $20,000 is taxable to Van?
> Jose paid the following amounts for his son to attend Big State University in 2018: How much of the above is a qualified higher education expense for purposes of his Qualified Tuition Program? $6,400 4,775 Tuition Room and board Books 772 A car to
> Charu Khanna received a Form 1099-B showing the following stock transactions and basis during 2018: None of the stock is qualified small business stock. The stock basis was reported to the IRS. Calculate Charu’s net capital gain or lo
> Arlen is required by his 2018 divorce agreement to pay alimony of $2,000 a month and child support of $2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen? What is the tax treatment of these two payments for Jane
> Answer the following questions: a. Under a 2017 divorce agreement, Joan is required to pay her ex-husband, Bill, $700 a month until their daughter is 18 years of age. At that time, the required payments are reduced to $450 per month. 1. How much of each
> Nicoula is a server at a La Jolla restaurant. Nicoula received $1,200 in unreported tips during 2018 and owes Social Security and Medicare taxes on these tips. Her total income for the year, including the tips, is $4,300. Is Nicoula required to file an i
> In June of 2018, Kevin inherits stock worth $125,000. During the year, he collects $5,600 in dividends from the stock. How much of these amounts, if any, should Kevin include in his gross income for 2018? Why? SCHEDULE B OMB No. 1545-0074 Interest
> Sally and Charles Heck received the following Form 1099-DIV in 2018: The Hecks also received the following dividends and interest in 2018 (Forms 1099-DIV not shown): Assuming the Hecks file a joint tax return, complete Schedule B of Form 1040 (on Pag
> In Year 1, Citradoria Corporation is a regular corporation that contributes $35,000 cash to qualified charitable organizations during the current tax year. The corporation has net operating income of $145,000, before deducting the contributions, and divi
> During 2018, Tom sold Sears stock for $10,000. The stock was purchased 4 years ago for $13,000. Tom also sold Ford Motor Company bonds for $35,000. The bonds were purchased 2 months ago for $30,000. Home Depot stock, purchased 2 years ago for $1,000, was
> Describe the methods that an individual taxpayer that holds Series I Bonds can use to recognize interest.
> How are qualified dividends taxed in 2018? Please give the rates of tax which apply to qualified dividends, and specify when each of these rates applies.
> Jessica and Carl were married on July 1, 2018. What are their options for filing status for their 2018 taxes?
> Sanjay is a single taxpayer that operates a curry cart on the streets of Baltimore. The business is operated as a sole proprietorship with no employees (Sanjay does everything). Sanjay’s Schedule C reports income of $87,000. His taxable income is $80,000
> Tyler, a single taxpayer, generates a net operating loss of $12,000 in 2017. He also generates a net operating loss of $6,000 in 2018. Finally, in 2019, Tyler’s business turns a corner and he generates taxable income of $17,000. a. How much of Tyler’s 20
> Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1992. He also acquired a rental house in 2018, which he actively manages. During 2018, Walter’s share of the partnership’s losses was $30,000, and his rental house ge
> Go to the U.S. General Services Administration (GSA) website. For the month of September 30, 2018, what is the per diem rate for each of the following towns: a. Flagstaff, AZ b. Palm Springs, CA c. Denver, CO
> Martin sells a stock investment for $26,000 on August 2, 2018. Martin’s adjusted basis in the stock is $15,000. a. If Martin acquired the stock on November 15, 2017, calculate the amount and the nature of the gain or loss. b. If Martin had acquired the s
> Joan is a self-employed attorney in New York City. Joan took a trip to San Diego, CA, primarily for business, to consult with a client and take a short vacation. On the trip, Joan incurred the following expenses: Calculate Joan’s tra
> Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2018, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a 2 acre proper
> Jonathan is a 35-year-old single taxpayer with adjusted gross income in 2018 of $46,300. He uses the standard deduction and has no dependents. a. Calculate Jonathan’s taxable income. Please show your work. b. When you calculate Jonathan’s tax liability a
> Alicia, age 27, is a single, full-time college student. She earns $13,200 from a part time job and has taxable interest income of $1,450. Her itemized deductions are $845. Calculate Alicia’s taxable income for 2018.
> Teresa is a civil engineer who uses her automobile for business. Teresa drove her automobile a total of 11,965 miles during 2018, of which 80 percent was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the yea
> Leslie is a single taxpayer who is under age 65 and in good health. For 2018, she has a salary of $24,000 and itemized deductions of $1,000. Leslie allows her mother to live with her during the winter months (3–4 months per year), but her mother provides
> Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows: What is the net income Margaret should show on her Schedule C? Show the calculation of her taxable business inc
> Melissa and Aaron are married taxpayers with taxable income of $105,000. a. When you calculate their tax liability, are you required to use the tax tables or the tax rate schedules, or does it matter? b. What is their 2018 tax liability
> Carey opens a law office in Chicago on January 1, 2018. On January 1, 2018, Carey purchases an annual subscription to a law journal for $170 and a 1-year legal reference service for $1,500. Carey also subscribes to Chicago Magazine for $54 so she can fi
> Determine from the tax table in Appendix A the amount of the income tax for each of the following taxpayers for 2018: Тахрауerts) Filing Status Тахаble Income Income Tax Allen Single MFS $21,000 24,545 35,784 27,450 45,000 Воyd Caldwell $ $. MFJ H o
> Marty is a sales consultant. Marty incurs the following expenses related to the entertainment of his clients in 2018: a. How much is Marty’s deduction for entertainment expenses for 2018? b. For each item listed above that you believe
> For each of the following independent cases, indicate the amount of gross income that must be included on the taxpayer’s 2018 income tax return. a. Malchia won a $4,000 humanitarian award. b. Rob won a new automobile (with a sticker price of $15,700 and
> While preparing Massie Miller’s 2018 Schedule A, you review the following list of possible charitable deductions provided by Massie: What would you say to Massie regarding her listed deductions? How much of the deduction is allowed fo
> How much of each of the following is taxable? a. Cheline, an actress, received a $6,400 gift bag for attending the Academy Awards Ceremony during 2018. b. Jon received a gold watch worth $660 for 25 years of service to his accounting firm (not a qualifie
> Scott Butterfield is self-employed as a CPA. He uses the cash method of account ing, and his Social Security number is 644-47-7833. His principal business code is 541211. Scott’s CPA practice is located at 678 Third Street, Riverside, C
> Linda and Richard are married and file a joint return for 2018. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline; Richard used the same amount. Linda and Richard also us
> Ulysses and Penelope are married and file separate returns for 2018. Penelope itemizes her deductions on her return. Ulysses’ adjusted gross income was $17,400, his itemized deductions were $2,250. Neither have any dependents. Calculate Ulysses’ income t
> Kristen, a single taxpayer, receives two 2018 Forms W-2 from the two employers she worked for during the year. One Form W-2 lists her wages in Boxes 1, 3, and 5 as $18,700. Her other employer’s Form W-2 has $43,000 in Box 1 but only $46,500 in both Box 3
> Greg died on July 1, 2018, and left Lea, his wife, a $45,000 life insurance policy which she elects to receive at $9,000 per year plus interest for 5 years. In the current year, Lea receives $9,500. How much should Lea include in her gross income?
> Lola, age 67, began receiving a $1,000 monthly annuity in the current year upon the death of her husband. She received seven payments in the current year. Her husband contributed $48,300 to the qualified employee plan. Use the Simplified Method Worksheet
> Ellen’s tax client, Tom, is employed at a large company that offers health care flexible spending accounts to its employees. Tom must decide at the beginning of the year whether he wants to put as much as $2,650 of his salary into the health care flexibl
> Indicate whether each of the items listed below would be included (I) in or excluded (E) from gross income for the 2018 tax year. a. Welfare payments b. Commissions c. Hobby income d. Scholarships for room and board e. $300 set of golf clubs, an employee
> Jason and Mary Wells, friends of yours, were married on December 30, 2018. They know you are studying taxes and have sent you an e-mail with a question concerning their filing status. Jason and Mary would each like to file single for tax year 2018. Jason
> Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2018. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary inc
> Diego, age 28, married Dolores, age 27, in 2018. Their salaries for the year amounted to $47,230 and they had interest income of $3,500. Diego and Dolores’ deductions for adjusted gross income amounted to $2,000, their itemized deductions were $16,000,
> Go to the Turbo Tax Blog (http://blog.turbotax.intuit.com/) and search the blog for an article on deductions related to service animals. Determine which of the following expenses might be deductible: purchase of the service animal, training the service a
> Go to the IRS website (www.irs.gov) and print out a copy of the most recent Schedule F of Form 1040.
> In each of the following situations, determine whether the taxpayer(s) has/have a dependent. Dependent? (Yes/No) a. Donna, a 20-year-old single taxpayer, supports her mother, who lives in her own home. Her mother has income of $1,350. b. William, age 43,
> Jason and Mary are married taxpayers in 2018. They are both under age 65 and in good health. For 2018 they have a total of $41,000 in wages and $700 in interest income. Jason and Mary’s deductions for adjusted gross income amount to $5,000 and their item
> During the 2018 tax year, Irma incurred the following expenses: If Irma’s adjusted gross income is $23,000, calculate her miscellaneous deductions. $244 150 Union dues Tax return preparation fee Brokerage fees for the purchase of
> Lydia, a married individual, was unemployed for a few months during 2018. During the year, she received $3,250 in unemployment compensation payments. How much of her unemployment compensation payments must be included in gross income?
> On January 3, 2018, Carey discovers his diamond bracelet has been stolen. The bracelet had a fair market value and adjusted basis of $7,500. Assuming Carey had no insurance coverage on the bracelet and his adjusted gross income for 2018 is $45,000, calcu
> In June of 2018, Maureen’s house is vandalized during a long-term power failure after a hurricane hit the city. The president of the United States declares Maureen’s city a disaster area as a result of the wide-scale vandalism. In which tax year may Maur
> Jerry, age 23, a full-time student and not disabled, lives with William and Sheila Carson. Jerry is William’s older brother. Jerry is single, a U.S. citizen, and does not provide more than one-half of his own support. William and Sheila are both 21 and f
> For each of the following cases, indicate the filing status for the taxpayer(s) for 2018 using the following legend: A—Single B—Married filing a joint return C—Married filing separate returns Dâ
> Jerry made the following contributions during 2018: In addition, Jerry donated used furniture to the Salvation Army that he purchased years ago for $400 with a fair market value of $200. Assuming Jerry has adjusted gross income of $45,000, has the nece
> Barbara donates a painting that she purchased three years ago for $8,000, to a university for display in the president’s office. The fair market value of the painting on the date of the gift is $14,000. If Barbara had sold the painting, the difference be
> For each of the following situations (none of the taxpayers claim dependents), indicate whether the taxpayer(s) is (are) required to file a tax return for 2018. Explain your answer. a. Helen is a single taxpayer with interest income in 2018 of $8,750.
> Helen paid the following amounts of interest during the 2018 tax year: Calculate the amount of Helen’s itemized deduction for interest (after limitations) for 2018. Mortgage interest on Dallas residence (loan balance $50,000) Auto
> Mike bought a solar electric pump to heat his pool at a cost of $2,500 in 2018. What is Mike’s credit?
> Carl and Jenny adopt a Korean orphan. The adoption takes 2 years and two trips to Korea and is finalized in 2018. They pay $7,000 in 2017 and $7,500 in 2018 for qualified adoption expenses. In 2018, Carl and Jenny have AGI of $150,000. a. What is the ado
> What is the total dollar amount of personal and dependency exemptions which a married couple with one child and $80,000 of adjusted gross income would claim in 2018?
> Vandell is a taxpayer in the 25 percent tax bracket. He invests in Otay Mesa Water District Bonds that pay 4.5 percent interest. What interest on a taxable bond would provide the same after-tax return to Vandell?
> Janie graduates from high school in 2018 and enrolls in college in the fall. Her parents pay $4,000 for her tuition and fees. a. Assuming Janie’s parents have AGI of $170,000, what is the American Opportunity tax credit they can claim for Janie? b. Assu
> In 2018, Gale and Cathy Alexander hosted an exchange student, Axel Muller, for 9 months. Axel was part of International Student Exchange Programs (a qualified organization). Axel attended tenth grade at the local high school. Gale and Cathy did not claim
> 1. Which of the following is not a change made to individual taxation by the Tax Cuts and Jobs Act? a. Repeal of personal exemptions b. General lowering of tax rates c. Repeal of the individual alternative minimum tax d. Introduction of the qualified bus
> Laura is a single taxpayer living in New Jersey with adjusted gross income for the 2018 tax year of $35,550. Laura’s employer withheld $3,300 in state income tax from her salary. In April of 2018, she pays $600 in additional state taxes
> Lisa Kohl (age 44) is an unmarried high school principal. Lisa received the following tax documents: During the year, Lisa paid the following amounts (all of which can be substantiated): Lisa’s sole stock transaction was reported
> Emily Jackson (Social Security number 765-12-4326) and James Stewart (Social Security number 466-74-9932) are partners in a partnership that owns and operates a barber shop. The partnership’s first year of operation is 2018. Emily and J
> Sherry Hopson owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95­ 1234321 and her Social Security number is 123­45­6789. Sherry k
> Patty Banyan is a single taxpayer living at 543 Space Drive, Houston, TX 77099. Her Social Security number is 466-33-1234. For 2018, Patty has no dependents, and her W-2, from her job at a local restaurant where she parks cars, contains the following inf
> Warner and Augustine Robins, both 33 years old, have been married for 9 years and have no dependents. Warner is the president of Dragon Lady Corporation located in Macon. The Dragon Lady stock is owned 40 percent by Warner, 40 percent by Augustine, and 2
> Richard McCarthy (born 2/14/64; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1966; Social security number 101-21-3434) have a 19-year-old son (born 10/2/99 Social Security number 555-55-1212), Jack who is a full-time student at th
> David and Darlene Jasper have one child, Sam, who is 6 years old (birthdate July 1, 2012). The Jaspers reside at 4639 Honeysuckle Lane, Los Angeles, CA 90248. David’s Social Security number is 577-11-3311, Darlene’s is
> John Fuji (birthdate June 6, 1980) moved from California to Washington in December 2017. His earnings and income tax withholding for 2018 for his job as a manager at a Washington apple-processing plant are: John’s other income include
> Bea Jones (birthdate March 27, 1984) moved from Texas to Florida in December 2017. She lives at 654 Ocean Way, Gulfport, FL 33707. Bea’s Social Security number is 466-78-7359 and she is single. Her earnings and income tax withholding fo
> Richard and Christine McCarthy have a 19-year-old son (born 10/2/99; Social Security number 555-55-1212), Jack, who is a full-time student at the University of Key West. Years ago, the McCarthys shifted a significant amount of investments into Jackâ
> William sold Section 1245 property for $25,000 in 2018. The property cost $37,000 when it was purchased 5 years ago. The depreciation claimed on the property was $17,000. a. Calculate the adjusted basis of the property. b. Calculate the recomputed basis
> In 2018, Professor Patricia (Patty) Pâté retired from the Palm Springs Culinary Arts Academy (PSCAA). She is a single taxpayer and is 62 years old. Patty lives at 98 Colander Street, Apt. 206D, Henderson, NV 89052. Professor P&A
> The above amounts do not reflect any allocation between rental and personal use of the condo. The Blacks are active managers of the condo. Required: Complete the Black’s federal tax return for 2018. Use Form 1040, Schedule 1
> John Williams (birthdate August 2, 1975) is a single taxpayer. John’s earnings and withholdings as the manager of a local casino for 2018 are reported on his Form W-2: John’s other income includes interest on a savin
> Christopher Crosphit (age 42) owns and operates a health club called “Catawba Fitness.” The business is located at 4321 New Cut Road, Spartanburg, SC 29303. The principal business code is 812190. Chris had the followin
> Russell (birthdate February 2, 1967) and Linda (birthdate August 30, 1972) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landsca
> Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a homemaker and Walt is a high school teacher. Skylar’s Social Security number is 222-43-7690 and Walt’s i
> Carl Conch and Mary Duval are married and file a joint return. Carl works for the Key Lime Pie Company and Mary is a homemaker after losing her job in 2017. Carl’s birthdate is June 14, 1973 and Mary’s is October 2, 19
> Ray and Maria Gomez have been married for 3 years. Ray is a propane salesman for Palm Oil Corporation and Maria works as a city clerk for the City of McAllen. Ray’s birthdate is February 21, 1990 and Maria’s is Decembe
> Ken (birthdate July 1, 1987) and Amy (birthdate July 4, 1989) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income.
> Abigail (Abby) Boxer is a single mother working as a civilian accountant for the U.S. Army. Her Social Security number is 676-73-3311 and she lives at 3456 Alamo Way, San Antonio, TX 78249. Helen, Abby’s 18-year-old daughter (Social Sec
> elly, age 38, has a $140,000 IRA with Blue Mutual Fund. He has read good things about the management of Green Mutual Fund, so he opens a Green Fund IRA. Telly asked for and received his balance from the Blue Fund on May 1, 2018. Telly opted to have no wi
