Question: Martin is a tax accountant employed by

> Explain the difference between budget reserves and management reserves.

> The chances of risk events occurring and their respective costs increasing change over the project life cycle. What is the significance of this phenomenon to a project manager?

> The Manchester United Soccer Tournament project team has identified the following potential risks to their project: Referees failing to show up at designated games. Fighting between teams. Pivotal error committed by a referee that determines the outcom

> Search the Web using the key words: “best practices, project management.” What did you find? How might this information be useful to a project manager?

> Bill (Senior VP of product development): Carlos [project manager], we have to talk. I am concerned about the way we manage project risk here at Futuronics. I just came from an international “Future Mote Devices” meeting at UC Berkeley. [Note: A mote is a

> The expected times and variances for the project activities are given below. What is the probability of completing the project in 25 periods? Varlance ID Description Prodecossor Pilot production Select channels of distrib. Develop mktg. program Non

> Individually, identify projects assigned in previous terms. Were both sociocultural and technical elements factors in the success or difficulties in the projects?

> Rachel, the project manager of a large information systems project, arrives at her office early to get caught up with work before her co-workers and project team arrive. However, as she enters the office she meets Neil, one of her fellow project manager

> Beach Corporation purchases tickets to sporting events and uses them to entertain customers. In the current year Beach Corporation purchases the following tickets: 100 tickets to football games (face value of the tickets is $7,000) ……………. $10,000 A skyb

> Milt, a self-employed attorney, incurs the following expenses in the current year: Dues paid to the local chamber of commerce ………………………..……. $ 1,000 Business lunches for clients and prospective clients (Milt does

> Amelie is an employee who uses her personal automobile in connection with her job. During 2017, Amelie drove her car a total of 28,000 miles. Her business log shows that she drove 22,400 miles for business purposes. She is reimbursed $0.30 per mile from

> Michelle is an employee who must use her personal automobile for employment-related business trips. During 2017, Michelle drives her car 60% for business use and incurs the following total expenses (100% use of car): Gas and oil …………………………………………... $12,

> Cassady, an employee of a law firm, maintains an office at the principal business location of her firm. She frequently travels directly from her home to client locations within and outside the metropolitan area. Cassady is not reimbursed for her transpor

> In the current year, Melissa, a single employee whose AGI is $100,000 before any of the items below, incurs the following expenses: Safe deposit box rental for investments …………………………………………. $ 100 Tax return preparatio

> Maxine incurs the following employment-related business expenses in the current year: Professional dues and subscriptions ………………………………………………….. $1,000 Airfare and lodging …………………………………………………………………………….. 2,000 Local transportation for employment- related

> In the current year, Mike’s AGI is $50,000. Mike has no miscellaneous itemized deductions other than the employment-related expenses listed below. Mike attends a professional trade association convention in Los Angeles. He spends three days at the meetin

> Marilyn, a business executive who lives and works in Cleveland, accepts a temporary out-of-town assignment in Atlanta for a period of ten months. Marilyn leaves her husband and children in Cleveland and rents an apartment in Atlanta during the ten-month

> Mary is an employee of ABC Corporation and incurs $3,600 of unreimbursed employment-related travel and entertainment expenses during the current year. These business expenses include the following: Airfare …………………………………………………………………………….. $1,500 Taxi far

> Five years ago, Brian and his brother Boyd formed Stewart Corp., a golf apparel manufacturing corporation. At that time, Brian contributed $300,000 to the corporation in exchange for 50% of its stock. During the current year, Brian needed some cash to pu

> In each of the following independent cases, determine the amount of the charitable contribution and the limitation that would apply. In each case, assume that the donee is a qualified public charity. a. Sharon donates a tract of land to a charitable org

> Monique is a self-employed manufacturer’s representative (i.e., an independent contractor) who solicits business for numerous clients and receives a commission based on sales. She incurs the following expenditures during the current year: Airfare and lo

> Mike incurs the following employment-related expenses in the current year: Actual automobile expenses……………………………………………$ 2,500 Moving expenses (deductible under Sec. 217)……………………4,000 Entertainment expenses……………………………………………………1,500 Travel expenses (inclu

> David is on the audit staff of a national accounting firm. He has been with the firm for three years and is a CPA. David has applied and been accepted into a prestigious MBA program. The program is two years in duration. David has decided to resign from

> Juan, a self-employed medical doctor, maintains an office in his home where he maintains patient records and performs billing procedures. Most of his time is spent visiting patients and performing surgical procedures in the operating room at several loc

> Jeremy is an executive for Columbia Corporation, which is going through a restructuring of its corporate headquarters operations. Columbia has offered to relocate Jeremy from its New York headquarters to its divisional operation in South Carolina and wil

> Georgia is an executive who recently completed an assignment with her employer at an away-from-home location. It was realistically expected that the assignment would be completed in 15 months but the actual time period was only 11 months. Georgia incurre

> The owner of an unincorporated small business is considering whether to establish a simplified employee pension (SEP) plan for its employees. a. What nontax factors might make a SEP attractive as an alternative to establishing a qualified pension or pro

> Discuss the major features of a Coverdell Education Savings Account (CESA).

> Sally, who is single and age 40, made deductible IRA contributions in several early years, but has not been eligible to make deductible IRA contributions for the last 5 years because she is covered under her employer’s plan. Her AGI is $100,000. She is i

> On September 30 of the current year, Fox Corporation files for bankruptcy. At the time, it estimates that the total FMV of its assets is $725,000, whereas the total amount of its outstanding debt amounts to $950,000. Fox Corporation has been engaged in t

> Your client, Charley Long, age 40, has requested your advice with respect to his IRA. He has a traditional IRA with a balance of $250,000 and his current AGI is $150,000. He expects his income to increase slightly when he retires at age 65. Charley has b

> Donna is an attorney who renders volunteer legal services to a Legal Aid Society, which provides legal advice to low-income individuals. The Legal Aid Society is a qualified charitable organization. During the current year she spends a total of 200 hours

> Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Explain. Consider any tax problems involved if the IRA funds are needed before age 59 ½. Would your answer change for a 55-ye

> Discuss the essential differences between a traditional IRA and a Roth IRA.

> What limitations are placed on self-employed individuals for contributions made to defined contribution H.R. 10 plans? Must self-employed individuals cover their full-time employees if an H.R. 10 plan is established?

> Is a self-employed individual, who is also employed and covered by an employer’s qualified pension plan, eligible to establish an H.R. 10 or a SEP plan on his or her self-employment income?

> What difference does it make if a nonqualified stock option has a readily ascertainable FMV on the grant date?

> List and discuss the qualification requirements for an incentive stock option plan (ISO). Describe the advantages and disadvantages of ISOs compared to nonqualified stock option plans.

> A recently-formed corporation is considering going public and anticipates substantial future appreciation in its stock. Would it be advisable for an executive/employee receiving stock (restricted property) to elect to recognize income immediately under S

> Why are nonqualified deferred compensation plans particularly well-suited for use in executive compensation arrangements?

> During the current year, Karen sells her entire interest in Central Corporation common stock for $22,000. She is the sole shareholder, and originally organized the corporation several years ago by contributing $89,000 in exchange for her stock, which qua

> Discuss the limitations and restrictions that the Internal Revenue Code places on employer contributions to qualified pension and profit-sharing plans.

> Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee under the following circumstances: a. No employee contributions are made to the plan. b. The pension plan provides for

> Assume all the same facts as in Problem I:7-51 except that James’ salary income is $130,000 instead of $70,000 and that he does not make the election. Compute James’ taxable income for the year. Problem 7- 51: During 2017, James, a single, cash method t

> Babson Corporation is proposing the creation of a qualified profit-sharing plan for its employees. The proposed plan provides for vesting of employer contributions after 20 years because the company wants to discourage employee turnover and does not feel

> Austin Corporation is proposing the establishment of a pension plan that will cover only employees with salaries in excess of $150,000. No other employees are covered under comparable qualified plans. What problems (if any) do you envision regarding the

> What is the difference between a defined benefit pension plan and a defined contribution pension plan?

> Compare and contrast the tax advantages accruing to employers and employees from the establishment of a qualified pension or profit-sharing plan versus a nonqualified deferred compensation arrangement (e.g., a restricted property plan).

> Discuss whether any of the following individuals are entitled to an office-in-home deduction: a. Maggie is a self-employed management consultant who maintains an office in her home exclusively used for client meetings and other business-related activiti

> a. Discuss the two requirements for an employee expense reimbursement plan to be treated as an accountable plan. b. How are expenses and reimbursements treated under an accountable plan? c. How are expenses and reimbursements treated under a nonaccount

> Dan, a full-time employee of Beta, Inc., also owns 10% of its outstanding stock. The other 90% is owned by his three brothers. During the year, the president of Beta came to Dan, expressing grave concern about whether the company had the financial resour

> Bass Corporation purchases 10 tickets to the Super Bowl in February 2017 for entertaining its customers. Due to unusually high demand, the tickets have to be purchased from scalpers for $15,000 (10 × $1,500). The face value of the tickets is only $2,000

> If an individual belongs to a country club and uses the facility primarily for business entertainment of customers, what portion of the club dues is deductible?

> Lynn is a salesperson who entertains clients at business luncheons. A business relationship exists for the entertainment, and there is a reasonable expectation of business benefit. However, no business discussions are generally conducted before, during,

> During 2017, James, a single, cash method taxpayer incurred the following expenditures: Qualified medical expenses………………………………………. $ 8,000 Investment interest expense………………………………………..16,000 Other investment activity expenses……………………………..15,000 Qualified

> Atlantic Corporation provides a cafeteria for its employees. The meal charges are set at a sufficiently high level that the employees are not taxed on the subsidized eating facilities. Are Atlantic’s cafeteria-related costs subject to the 50% disallowanc

> Liz is an employee who regularly entertains customers in connection with her job. In the current year, Liz incurs $6,000 in business meal expenses that are connected with entertainment. Liz’s expenses are not lavish or extravagant. She itemizes her deduc

> Latasha is a self-employed attorney who entertains clients and potential clients in her home. a. What requirements must be met to qualify the outlays as deductible entertainment expenses? b. What is the difference between “directly related” and “associ

> Louis incurs “directly related” entertainment expenses of $4,000, but he is reimbursed by his employer for only $3,000 after an adequate accounting is made. a. How are these amounts reported on Louis’s tax return? b. What are the tax consequences if Lo

> Why are strict recordkeeping requirements required for the deduction of entertainment expenses?

> Len incurs $5000 of deductible moving expenses in the current year and is fully reimbursed by his employer in the same year. a. How are the expense deduction and the reimbursement reported on Len’s tax return if he uses the standard deduction? b. What

> In a rage because of personal difficulties, Evan drove recklessly and crashed his automobile, doing $8,000 worth of damage. Fortunately, no one was injured. Since Evan received two speeding tickets during the past year, he is concerned about losing his i

> Does it matter whether a moving expense is incurred by an employee, a self-employed individual, or an unemployed person?

> What are the two basic requirements that must be met to permit a deduction for moving expenses?

> Discuss the reporting procedures that should be followed by an employee to report employment related expenses on his or her tax return under the following conditions: a. Expenses are less than reimbursements, and no accounting is made to the employer.

> If an employee or self-employed individual uses the actual method of deducting automobile expenses and claims depreciation for the first two years of business use, can the individual switch to the standard mileage rate method for the third year and beyon

> During 2017, Doug incurs the following deductible expenses: $2,300 in state income taxes, $3,000 in local property taxes, $800 in medical expenses, and $2,000 in charitable contributions. Doug is 33, single, has no dependents, and has $35,000 AGI for the

> If an employee (or self-employed individual) uses the standard mileage rate method for the year in which an automobile is acquired, may the actual expense method be used in a subsequent year? If so, what restrictions are imposed (if any) on depreciation

> If an employee receives a reimbursement of 40 cents a mile from her employer for employment related transportation expenses, is the employee permitted to deduct the difference between the standard mileage rate and the reimbursement rate as an unreimburse

> If an employee receives a specific monthly amount from his or her employer as a reimbursement for employment-related entertainment, travel, and transportation expenses, why is it necessary to allocate a portion of the total reimbursement to each expense

> Louie is a full-time employee for a large corporation and also an investor in the stock market in his spare time. In the current year, Louie incurs $2,500 of travel expenses and $1,000 in registration fees related to attending investment seminars. He ded

> Latoya, a college professor, takes a nine-month leave of absence from her employment at a college in Ohio and accepts a visiting professorship (temporary assignment) at a college in Texas. Latoya leaves her husband and children in Ohio and incurs the fol

> Five years ago, Cora incorporated Gold, Inc., by contributing $80,000 and receiving 100% of the Gold common stock. Gold, Inc. is engaged in a retail business. Cora is single. Gold experienced financial difficulties. On December 22 of the current year, Co

> Kelly is an employee who incurs $2,200 of business meal expenses in connection with business entertainment and travel, none of which are reimbursed by her employer. $500 of the business meal costs are considered to be lavish or extravagant. How much can

> In each of the following cases involving travel expenses, indicate how each item is reported on the taxpayer’s tax return. Include any limitations that might affect its deductibility. a. Marilyn lives in Houston and owns several rental properties in Den

> Which of the following deduction items are subject to the 2% nondeductible floor applicable to miscellaneous itemized deductions? a. Investment counseling fees b. Fees for tax return preparation c. Unreimbursed professional dues for an employee d. Ga

> Determine whether the following expenses are either deductible for AGI or from AGI or nondeductible on an employee’s return. Indicate whether the expenses are subject to the 2% nondeductible floor for miscellaneous itemized deductions. a. Automobile exp

> Why is it important to distinguish whether an individual is an employee or an independent contractor (self-employed)?

> On April 1 of the current year, Henry borrows $12,000 from the bank for a year. Because the note is discounted for the interest charge and Henry receives proceeds of $10,200, he is required to repay the face amount of the loan ($12,000) in four equal qua

> Jim had $100,000 in deposits in a savings account at a bank in Page, Arizona. The bank collapsed and Jim did not receive anything for his deposits. The bank was chartered by the state of Arizona and was not insured by federal law. Jim is not sure what hi

> On November 15, Alex and Deanna Kent come to you for tax advice. The Kents, a married couple that files a joint tax return, own a rental home in Southern California. From January to November 1 of the current year, they rented out the home for 210 days. S

> Jace Seaton is a single taxpayer living in Eugene, Oregon. From 2013 to 2016, he worked as the CEO of Wengren & Jeffers, a local architectural firm. In 2017, he left the firm to start his own company as well as spend more time golfing and travelling. On

> In 2014, Annie Cook and several family members formed Treehouse Rentals, Inc., in Denver, Colorado. Treehouse is a closely held C corporation engaged in the rental real estate business. Treehouse properly classifies its activities as passive. In 2014, 20

> On January 12 of the current year, Barney Corporation, a publicly held corporation, files for bankruptcy. During the bankruptcy proceedings it is determined that creditors will only receive 10% of what they are owed and that the shareholders will receive

> During 2017, Karen, a single taxpayer, reports the following income and expense items relating to her interior design business: Revenues………………………………….$52,000 Cost of goods sold……………………….41,000 Advertising………………………………….3,300 Office supplies……………………………...

> Assume the same facts as in Problem I:8-56, except that the interest on their personal residence is $12,100 and they also have a $4,500 deductible casualty loss on personal property (after limitations). a. What is Michelle and Mark’s taxable income or lo

> Assume the same facts as in Problem I:8-56, except in addition to the other itemized deductions Michelle and Mark suffer a $4,500 deductible personal casualty loss (after limitations). a. What is Michelle and Mark’s taxable income or loss for the year?

> Michelle and Mark are married and file a joint return. Michelle owns an unincorporated dental practice. Mark works part-time as a high school math teacher, and spends the remainder of his time caring for their daughter. During 2017, they report the follo

> Assume the same facts as in Problem I:8-54, except that Becky and Ken are not related and that under the terms of the loan Ken agrees to repay Becky the $5,000 plus interest (at a reasonable stated rate) over a five-year period. What is Becky’s bad debt

> During 2016, Becky loans her brother Ken $5,000, which he intends to use to establish a small business. Because Ken has no other assets and needs cash to establish the business, the agreement provides that Ken will repay the debt if (and when) sufficient

> Can a casualty loss on a personal-use asset create or increase an NOL? Explain.

> Much has been written about abusive practices concerning the valuation of noncash property donated to qualified charities. under sec. 170, both corporations and individuals may deduct the fMv of property contributed to charitable organizations. of course

> Is the $100 floor on personal-use casualty losses imposed on each individual loss item if more than one item of property is destroyed in a single casualty? Is the floor imposed before or after the casualty gains are netted against the casualty losses?

> For individuals, how are casualty losses on personaluse property reported on the tax return? How are casualty losses on business property reported?

> Under what circumstances a loss arising from a casualty or theft may be deducted in a year other than the year in which the loss occurs?

> Compare and contrast the computational rules for deducting casualty losses on personal-use property with casualty losses incurred on business or investment property.

> During the current year, Rulon’s toilet overflowed because of a mechanical problem. Rulon was outside playing croquet, and by the time he returned, the water had flooded the basement, causing damage to the carpet, walls, and ceiling. The cost of repairin

> Explain how a taxable gain on property can be realized because of a casualty event such as a fire or theft. How are these gains treated?

> What tests must be met to qualify a loss as deductible under the casualty loss provisions? Discuss the application of each of these tests.

> Are the losses suspended under the passive loss rules lost forever? Explain.