Question: Karen is a wealthy retired investment advisor

> Bob is a single, 40-year-old doctor earning $190,000 a year and is not covered by a pension plan at work. How much can he put into a deductible Traditional IRA in 2016?

> Barry is a single, 40-year-old software engineer earning $190,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2016?

> What is the maximum amount a 55-year-old taxpayer and 52-year-old spouse can put into a Traditional or Roth IRA for 2016, assuming they earn $70,000 in total and are not participants in pension plans?

> What is the maximum amount a 45-year-old taxpayer and 45-year-old spouse can put into a Traditional or Roth IRA for 2016 (assuming they have sufficient earned income, but do not have an income limitation and are not covered by another pension plan)?

> Phil and Linda are 25-year-old newlyweds and file a joint tax return. Linda is covered by a retirement plan at work, but Phil is not. a. Assuming Phil’s wages were $27,000 and Linda’s wages were $18,500 for 2016 and they had no other income, what is the

> Karen, 28 years old and a single taxpayer, has a salary of $30,000 and rental income of $33,000 for the 2016 calendar tax year. Karen is covered by a pension through her employer. a. What is the maximum amount that Karen may deduct for contributions to h

> Sherry moved to Chicago in the current year to take a new job after being laid off from her job in San Diego. She incurred $5,000 of costs moving her household goods, $300 for a one-way airplane ticket to Chicago, $800 for her first month’s rent, and $50

> Go to the IRS website (www.irs.gov) and redo Problem 6 using the most recent interactive Form 3903, Moving Expenses. Print out the completed Form 3903.

> Lola, age 62, began receiving a $1,000 monthly annuity in the current year upon the death of her husband. She received eight payments in the current year. Her husband contributed $58,500 to the qualified employee plan. Use the Simplified Method Worksheet

> Assume Keith’s employer reimburses him $4,200 for the move. Using the information from Problem 5, calculate Keith’s moving expenses deduction using Form 3903

> In June of 2016, Keith Silva accepts a new job with the same employer in San Diego. He formerly commuted 12 miles to a job in Canton, OH; San Diego is 2,150 miles from his old home. He incurs the following expenses in his move from Ohio in 2016: Moving a

> Clifford Johnson has a limited partnership investment and a rental condominium. Clifford actively manages the rental condominium. During 2016, his share of the loss from the limited partnership was $11,000, and his loss from the rental condo was $17,000.

> Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1990. He also acquired a rental house in 2016, which he actively manages. During 2016, Walter’s share of the partnership’s losses was $30,000, and his rental house ge

> Sherry rents her vacation home for 6 months and lives in it for 6 months during the year. Her gross rental income during the year is $6,000. Total real estate taxes for the home are $950, and interest on the home mortgage is $3,000. Annual utilities and

> Dick owns a house that he rents to college students. Dick receives $800 per month rent and incurs the following expenses during the year: Real estate taxes $1,250 Mortgage interest 1,500 Insurance 425 Repairs 562 Association

> Cindy operates a computerized engineering drawing business from her home. Cindy maintains a home office and properly allocates the following expenses to her office: Depreciation …………………………………………………... $1,500 Utilities …………………………………………………………. 500 Real es

> Carrie loaned her friend $4,500 to buy a used car. She had her friend sign a note with repayment terms and set a reasonable interest rate on the note because the $4,500 was most of her savings. Her friend left town without a forwarding address, and nobod

> Sharon is an orthopedic surgeon. She performed a surgery 2 years ago and billed $10,000 to her patient. After 2 years of attempting to collect the money, it is clear that she will not be able to collect anything. Sharon reports income on her tax return o

> Steinar loaned a friend $9,500 to buy some stock 3 years ago. In the current year the debt became worthless. a. How much is Steinar’s deduction for the bad debt for this year? (Assume he has no other capital gains or losses.) b. What can Steinar do with

> For each of the following independent cases, indicate the amount of gross income that must be included on the taxpayer’s 2016 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

> Sam owns an insurance agency and makes the following business gifts during the year. Calculate Sam’s deduction for business gifts. Amount Allowed Donee Amount Ms. Sears (a client) $35, plus $4 shipping $ Mr. Williams (a tennis part

> Cooper and Brandy are married and file a joint income tax return with two separate Schedule Cs. Cooper is an independent security specialist who spent $395 on uniforms during the year. His laundry expenses for the uniforms were $175 for this year, plus $

> Carey opens a law office in Chicago on January 1, 2016. On January 1, 2016, 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 fin

> a. Loren is a secretary in a lawyer’s office. Since he often deals with legal matters, Loren feels that a law degree will be beneficial to him. May Loren deduct his educational expenses for law school as a miscellaneous itemized deduction? Explain b. Ali

> Marty is a sales consultant. Marty incurs the following expenses related to the entertainment of his clients in 2016: Dues to a country club ………………………………………………… $4,500 (The country club was used for business 25 days of the total 75 days that it was use

> Grace is a self-employed sales consultant who spends significant time entertaining potential customers. She keeps all the appropriate records to substantiate her entertainment. She has the following expenses in the current year: Restaurant meals …………………

> Bob is a self-employed lawyer and is required to take a week of continuing legal education every year to maintain his license. This year he paid $1,150 in course fees for his continuing legal education in a different city. He also paid $354 for airfare a

> Go to the U.S. General Services Administration (GSA) website. For 2016, what is the per diem rate for each of the following towns: a. Flagstaff, AZ for April and November b. Palm Springs, CA for March and December c. Denver, CO for June and September

> 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: Airfare to and from San Diego …………………………

> Martha is a self-employed tax accountant who drives her car to visit clients on a regular basis. She drives her car 4,000 miles for business and 10,000 for commuting and other personal use. Assuming Martha uses the standard mileage method, how much is he

> How much of each of the following is taxable? a. Cheline, an actress, received a $10,000 gift bag from the Oscars during 2016. b. Jon received a gold watch worth $660 for 25 years of service to his accounting firm (not a qualified award). c. Kerry won $1

> Art is a self-employed installer of home entertainment systems, and he drives his car frequently to installation locations. Art drove his car 15,000 miles for business purposes and 20,000 miles in total. His actual expenses, including depreciation, for o

> Teresa is a civil engineer who uses her automobile for business. Teresa drove her automobile a total of 14,800 miles during 2016, of which 75 percent was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the yea

> Go to the IRS website (www.irs.gov) and redo Problem 5, using the mos recent interactive Cost of Goods Sold Schedule on Page 2 of Schedule C (Form 1040). Print out the completed Cost of Goods Sold schedule.

> Kevin owns a retail store, and during the current year he purchased $610,000 worth of inventory. Kevin’s beginning inventory was $67,000, and his ending inventory is $77,200. During the year, Kevin withdrew $1,780 in inventory for his p

> Lawrence owns a small candy store that sells one type of candy. His beginning inventory of candy was made up of 10,000 boxes costing $1.50 per box ($15,000), and he made the following purchases of candy during the year: At the end of the year, Lawrence

> 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: Gross income ……………………………………………......... $50,000 Travel …………………………………………….........………………… 1,000 Contribution

> Go to the IRS website (www.irs.gov) and redo Problem 1 (Chapter 3, Group 2) using the most recent interactive Schedule C (Form 1040) on the IRS website that will allow the required information to be input. Print out the completed Schedule C.

> Please answer the following questions regarding the taxability of Social Security: a. A 68-year-old taxpayer has $20,000 in Social Security income and $100,000 in tax-free municipal bond income. Does the municipal bond income affect the amount of Social

> Scott Butterfield is self-employed as a CPA. He uses the cash method of accounting, 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, CA 92860. During 201

> As part of the property settlement related to their divorce, Cindy must give Allen the house that they have been living in, while she gets 100 percent of their savings accounts. The house was purchased for $90,000 15 years ago in Southern California and

> During the 2016 tax year, Brian, a single taxpayer, received $7,200 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

> Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales …………………………………………………... $ 5,000 Depreciation on greenhouse …………………. 10,000 Fertilizer, soil, pots ………………………………

> Ellen’s tax client is employed at a large company that offers medical flexible spending accounts to its employees. Tom must decide at the beginning of the year whether he wants to put as much as $2,550 of his salary into the medical spending account. He

> Maggie lost her job in the current year. She paid the expenses of owning her home, interest on the mortgage, and property taxes out of savings. Her tax return shows negative taxable income of $20,000. How should this loss be treated?

> Linda and Richard are married and file a joint return for 2016. 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

> Carl has had a couple of good years in his new business. However, in the current year he has a net operating loss of $80,000. He does not feel that the future of his business is very bright. As his tax accountant, how would you recommend Carl treat his n

> Lydia, a married individual, was unemployed for a few months during 2016. During the year, she received $3,250 in unemployment compensation payments. How much of her unemployment compensation payments must be included in gross income?

> Ann is a self-employed restaurant critic who does her work exclusively from a home office. Ann’s income is $25,000 before the home office deduction this year. Her office takes up 200 square feet of her 1,000-square-foot apartment. The total expenses for

> Randi qualifies for a home deduction. The amount of space devoted to business use is 400 square feet of the total 2,000 square feet of her home. Randi’s mortgage interest and property taxes in total are $1,600. Other deductions properly

> Arlen is required by his 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? Arle

> Vandell is a taxpayer in the 28 percent tax bracket. He invests in Otay Mesa Water District Bonds that pay 4.5 percent interest. What taxable interest rate will provide the same after-tax return to Vandell?

> Pete qualifies for a home office deduction. The amount of space devoted to business use is 300 square feet of the total 1,200 square feet in his apartment. Pete’s total rent for the year is $9,600, and he pays utilities (other than telephone) of $2,500 f

> a. Milton is a nurse whose employer provided meals for him on the employer’s premises, since he is given only 30 minutes for lunch. Is the value of these meals taxable income to Milton? Explain b. Mary is a San Diego ambulance driver. The city provides

> Ellen is a single taxpayer. Ellen’s employer pays $150 per month ($1,800 this year) for her health insurance. During the year, Ellen had medical expenses of $3,500 and the insurance company paid $2,000 of the expenses. How much of the above amounts, if a

> Skyler is covered by his company’s health insurance plan. The health insurance costs his company $3,500 a year. During the year, Skyler is diagnosed with a serious illness and health insurance pays $100,000 for surgery and treatment. How much of the insu

> Robbie receives a scholarship of $20,000 to an elite private college. $12,000 of the scholarship is earmarked for tuition, and $8,000 covers his room and board. How much of the scholarship, if any, is taxable to Robbie?

> Charlene receives a gift from her boyfriend of $10,000. He knows she is having financial problems and wants to help her. How much of the gift is taxable to Charlene?

> Gwen is a tax accountant who works very hard for a large corporate client. The client is pleased and gives her a gift of $10,000 at year-end. How much of the gift is taxable to Gwen?

> In June of 2016, Kevin inherits stock worth $125,000. During the year, he collects $6,500 in dividends from the stock. How much of these amounts, if any, should Kevin include in his gross income for 2016? Why?

> Helen receives a $200,000 lump sum life insurance payment when her friend Alice dies. How much of the payment is taxable to Helen?

> Answer the following questions, assuming that the related divorce agreements were executed during 2016. a. Under a 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 re

> Plot the following data and specify the type of relationship between the two variables. (Place “Price” on the vertical axis and “Quantity Supplied” on the horizontal axis.) Price of Apples ($) Quantity Supplied of Apples  0.25 350  0.50 400  0.

> When is a pie chart better than a bar chart for illustrating data?

> What is the slope of a 45-degree line?

> What is the special characteristic of a 45-degree line?

> In Exhibit 4(b), determine the slope between points A and D.

> Scarcity is the condition in which peoples’ wants (for goods and services) are unlimited or infinite. Do you agree or disagree? Explain your answer.

> There are 30 students in an Economics class. Is the opportunity cost of attending the class the same for each of the 30 students? Why or why not.

> All theories are abstractions from reality. What does this mean?

> Can a person exercise “too much”? Explain your answer.

> Explain what it means to make a decision at the margin.

> In Exhibit 4(a), determine the slope between points C and D.

> Suppose the marginal costs of reading are constant and the marginal benefits of reading decline (over time). Initially, the marginal benefits of reading are greater than the marginal costs. Draw the marginal benefit curve and marginal cost curve of readi

> Jim could undertake activity X, but chooses not to. Draw the marginal benefit and cost curves for activity X from Jim’s perspective.

> Using the diagram you drew in question 1, lower the marginal costs of reading and identify the new efficient amount of reading. Also, identify the additional net benefits derived as a result of the lower marginal cost of reading. Marginal costs, mar

> Can either scarcity or one of the effects of scarcity be found in a car dealership? Explain your answer.

> What is the difference between the resource labor and the resource entrepreneurship?

> What do economists mean when they say that “institutions matter”?

> Give an example of something that is a good for one person and a bad for another person.

> Give two examples for each of the following: (a) an intangible good, (b) a tangible good, (c) a bad.

> The United States is considered a rich country because Americans can choose from an abundance of goods and services. How can there be scarcity in a land of abundance?

> Discuss the opportunity costs of attending college for four years. Is college more or less costly than you thought it was? Explain.

> Plot the following data and specify the type of relationship between the two variables. (Place “Price” on the vertical axis and “Quantity Demanded” on the horizontal axis.) Price of Apples ($) Quantity Demanded of Apples  0.25 1,000  0.50 800  

> Is it possible for a person to incur an opportunity cost without spending any money? Explain.

> Explain the link between scarcity and each of the following: (a) choice, (b) opportunity cost, (c) the need for a rationing device, (d) competition.

> A theory is an abstraction from reality. What does this mean?

> Janice decides to go out on a date with Kyle instead of Robert. Do you think Janice is using some kind of “rationing device” to decide who she dates? If so, what might that rationing device be?

> The person who smokes cigarettes cannot possibly be thinking in terms of costs and benefits because it has been proven that cigarette smoking increases one’s chances of getting lung cancer. Do you agree or disagree with the part of the statement that rea

> If you found $10 bills on the sidewalk regularly, we might conclude that individuals don’t try to maximize net benefits. Do you agree or disagree with this statement? Explain your answer.

> Jackie’s alarm clock buzzes. She reaches over to the small table next to her bed and turns it off. As she pulls the covers back up, Jackie thinks about her 8:30 American history class. Should she go to the class today or sleep a little longer? She worked

> Would there be a need for a rationing device if scarcity did not exist? Explain your answer.

> What is the difference between positive economics and normative economics? Between microeconomics and macroeconomics?

> When two individuals enter into an exchange, you can be sure that one person benefits and that the other person loses. Do you agree or disagree with this statement? Explain your answer.

> Represent the following data in bar graph form (a) Sales of hot dogs and sales of hot dog buns (b) The price of winter coats and sales of winter coats (c) The price of personal computers and the production of personal computers (d) Sales of toothbrush

> Why do people enter into exchanges?

> A change in X will lead to a change in Y; the predicted change is desirable, so we should change X. Do you agree or disagree? Explain.

> What does an economist mean if she says that there are no $10 bills on the sidewalk?

> Ivan stops studying before the point at which his marginal benefits of studying equal his marginal costs. Is Ivan forfeiting any net benefits? Explain your answer.

> How would an economist define the efficient amount of time spent playing tennis?