Osprey Corporation, an accrual basis taxpayer, had taxable income for 2018 and paid $40,000 on its estimated state income tax for the year. During 2018, the company received a $4,000 refund upon filing its 2017 state income tax return The company filed its 2018 state income tax return in August 2019 and paid the $7,000 state income tax due for 2018. In December 2018, the company received a notice from the state tax commission that an additional $6,000 of income tax was due for 2016 because of an error on the return. The company acknowledged the error in December 2018 and paid the additional $6,000 in tax in February 2019. What is Osprey's 2018 Federal income tax deduction for state income taxes?
> In many cases, a surviving spouse ultimately becomes a head of household for filing status purposes. Explain this statement.
> Comment on the availability of head-of-household filling status for 2018 in each of the following independent situations: a. Taxpayer lives al0ne but maintains the household of his parents. In July 2018, the parent use their savings to purchase a new BMW
> Oliver is a US citizen employed by a multinational corporation at its London office. Oliver is married to Regina a British citizen, and they reside in England. Regina receives substantial rent income from rea1 estate she owns in western Europe. a. Must O
> What are the differences between Technical Advice Memoranda (TAMs) and Technical Expedited Advice Memoranda (TEAMs)?
> Mark and Lisa were divorced in 2017. In 2018 Mark has custody of their children, but Lisa provides nearly all of their support. Who is entitled to claim the children as dependents?
> Sri is considering the IRS to find out whether a possible stock redemption would be a qualified stock redemption. Outline some relevant tax issues Sri faces in determining whether to request a letter ruling.
> Marsha exchanged land in Florida with an FMV of $52,700 and an adjusted basis of $60,000 for land in Iowa with an FMV of $57,700. Marsha also paid $5,000 cash in the transaction. What is Marsha's basis in the land received? a. $55,000 b. $57,700 c. $60,0
> Monique owns a building that she leases to an individual who operates a grocery store. Rent income is $10,000, and rental expenses are $6,000. On what Form 1040 schedule or schedules are the income and expenses reported?
> On December 29, 2018, an employee received a $5,000 check from her emp1oyer's client. The check was payable to the employer. The employee did not remit the funds to the employer until December 30, 2018 The employer deposited the check on December 31, 201
> Magda maintains the household that includes a son (age 30) and a cousin (age 28). She can claim the cousin as a dependent but not her son. Explain.
> In late December 2018, Gray Corporation (a calendar year C corporation) pledges a $ 50,000 donation to a local relief agency formed to fight AIDS in Africa. Although Gray's board of directors authorized the donation in 2018, the payment is not made until
> The taxpayer has excess capital losses (both short -term and long-term) for the current year. Discuss the income tax ramifications of the losses if the taxpayer is: a. An individual. b. A C corporation. c. An S corporation. d. A partnership.
> Contrast income taxation of individua1s and C corporations as to each of the following: a. Alternative minimum tax. b. Dividend income. c. Use of the cash method of accounting. d. Accounting period used for tax purposes. e. Applicable tax rates. f. Due d
> The Owen brothers have obtained financing to start a new venture. The business will be high-risk as to potential liability and is expected to incur losses before becoming profitable. What type of entity might the Owens consider using?
> What are the primary tax and nontax advantages of limited liability companies?
> What purpose is served by the Check -the-box Regulations?
> Explain why partnerships and S corporations are considered "pass-through" entities, and present an example of how the pass-through works.
> John purchased a primary residence on October 15, year 2, for $240,000. On June 10, year 4, he married Karen, and she moved into the house. Karen was not added to the deed. On October 15, year 6, they moved out of the house. John sold the home on October
> What are guaranteed payments? When might such payments be used?
> Blaine, Cassie, and Kirstin are equal partners in the Maize Partnership. During the year, Maize has qualified dividends and a charitable contribution deduction. Explain the following results: a. Blaine pays less tax than Cassie and Kirstin on his share o
> Indicate whether each of the following will increase (+), decrease (一)， or have no effect (NE) on a partner's basis in a partnership interest: a. Operating loss of the partnership. b. Capital gains of the partnership. c. Tax-exempt income of the partners
> Cynthia and Doug are equal shareho1ders in Penguin, a calendar year S corporation. At the end of the current tax year, Penguin has an operating loss. Although Cynthia and Doug have the same basis in their Penguin stock, Cynthia can deduct all of her shar
> A calendar year corporation has an election under subchapter S. What will be the effect, if any, of the following events on its S status? a. The board of directors of the corporation revokes its S election in March of the current year. b. A shareholder w
> Sy1via and Trang want to enter into business together and are unsure what type of entity to form (if any). They are concerned about the complexity of the paperwork required, the protection of personal asset from business creditors, and flexibility of sha
> When a corporation distributes property as a dividend, what are the tax effects on the corporation and its shareholders under the following assumptions? a. The property has declined in value. b. The property has appreciated in value.
> Cynthia and some associates want to form a corporation develop and operate an industrial park. Cynthia is to contribute the land, which has significantly appreciated in value. She would like to recognize some of this gain to offset losses from other sour
> Small closely held corporations are formed with a minimum of investment. Key assets used in the business are then leased to the corporation by the shareholders. What are the advantages of this approach?
> Beige Corporation has a fiscal year ending April 30. For the year ending April 30, 2018, Beige generated taxable income of $1.2 million. What is Beige Corporation's tax liability for this period?
> Which of the following statements is not correct? a. The basis of an asset that is purchased must be adjusted for depreciation allowable b. The general rule for the basis of property acquired by gift is a carryover of basis from the donor. c. If an asse
> Mallard Corporation was formed in December 2018 and plans to use the cash basis of accounting. Mallard incurred one-half of its organizational expenses in December 2018 and one-half in January 2019. The payment of these expenses also occurred in these tw
> Two small C corporations have invested in the stock of IBM Corporation. Although they own the same number and type of shares, one corporation is able to claim a larger dividends received deduction than the other. Explain why this could be possible.
> The dividends received deduction does not always completely eliminate the effect of taxation of dividend income at the corporate shareholder level Explain this statement.
> Kite, a calendar year C corporation, incurred a net operating loss in 2017 and a net operating loss in 2018. Explain any differences in the treatment of these NOLs.
> Golf Corporation generates a $40,000 net operating l0ss in 2018. Leo Tree’s the Golf CEO expect to offset all of the 2019 taxable income with the NOL. Explain to Leo whether that is possible.
> If a C corporation donates ordinary income property to a qualified charity, the measure of the amount of the deduction is the adjusted basis of the property. Do you agree with this statement? Explain.
> Describe a situation in which a corporation will not be treated as such under state law.
> Scott Henry calls you and asks about a savings incentive match plan for employees (SIMPLE). Prepare a memo for the tax files about your response.
> Joey, who is single, is not covered by another qualified plan and earns $122,000 at his job in 2018. How much can he contribute to a traditional IRA or to a Roth IRA in 2018?
> Should a 31-year-old self-employed single woman establish a traditional deductible IRA, a traditional nondeductible IRA, or a Roth IRA? She has two children, ages 10 and 8.
> Jasmin purchased 100 shares of Pinkstey Corporation (publicly traded company) on January 1 of year 1 for $5,000. The FMV of the shares at the end of year 1 was $6,000. On January 1 of year 4, Pinkstey Corporation declared a 2-for-1 stock split when the f
> Donna is retiring and wants you to explain her alternatives for receiving payments from her qualified retirement plan.
> Which of the following would be considered a tax benefit or advantage of a qualified retirement plan? a. Certain lump-sum distributions may be subject to capital gain treatment. b. Employer contributions are deductible by the employer in the year of cont
> Harvey Pehrson, who is age 71, is going to receive a lump-sum distribution from a qualified plan in 2018. He has asked you to provide him with a Communications description of the alternatives available to him for taxing the lump-sum distribution. Draft a
> Penny plans to retire in 2018 at age 70. Identify any issues that Penny faces with respect to distributions from her qualified retirement plan.
> Indicate whether the following statements apply to a pension plan (P), a profit sharing plan (PS), both (B) or neither (N). a. Forfeited amounts can be used to reduce future contributions by the employer. b. Allocation of forfeitures may discriminate in
> What is the spread with respect to an incentive stock option? How is treated under the tax law?
> What conditions cause the golden parachute arrangement to be penalized?
> During his senior year in college, Sandy is drafted by the Los Angeles Dodgers. When he graduates, he expects to sign a five-year contract in the range of $1.7 million per year. Sandy plans to marry his girlfriend before he reports to the Dodger farm tea
> Suppose an individual is 55 years old. How much of an additional catch-up IRA contribution can the person make?
> Disregarding any small business exceptions, for the current year, which of the following situations will result in a taxpayer owing a penalty for underpayment of taxes? a. A married filing joint taxpayer had AGI of $160,000 and total tax of $35,000 in th
> In 2018, taxpayer became ineligible to use the cash method of accounting. At the beginning of the year, accounts receivable totaled $240,000, account payable for merchandise totaled $80,000, and the inventory on hand totaled $320,000. What is the amount
> In December 2018, Nell, Inc., an accrual basis taxpayer paid $12,000 for insurance premiums for the 2019 calendar year. How much of the premiums can Nell, Inc., deduct in 2018?
> Fred, a cash basis taxpayer, received a $15,000 bonus from his employer in 2018. The bonus was based on the company's profits for 2017. In 2019, the company discovered that its 2017 profits were computed incorrectly. As a result, Fred received an additio
> Art Funkel started his incorporated medical practice on June 1, 2018. He immediately made an S election for the corporation. Art would like the corporation to adopt a tax year ending May 31 so that a full 12 months of income would be included in the firs
> A law practice was incorporated on January 1, 2018, and expects to earn $25,000 per month before deducting the lawyer's salary. The lawyer owns 100% of the stock. The corporation and the lawyer both use the cash method of accounting. The corporation does
> Blue is a retailer that uses FIFO inventory method. Blue has consistently taken its physical inventory at the end of the on the last day of its tax year December 31. This practice is very unpopular with its employees, who do not 1ike working on New Year'
> Opal, 1nc., is about to make its first attempt to borrow from a local bank. The company uses LIFO for tax purposes, solely to defer taxes, and believes that income computed using the FIFO method would better reflect its income. The company also uses the
> Amber Auto Parts adopted the dollar-va1ue LIFO inventory method. The company has consistently used a retail price index when it should have used a producer's. As a resu1t, its LIFO layers have been consistently undervalued. Why is the company's error exa
> Largo Company is an engineering consu1ting business that uses the accrual method of accounting for its services. Mango Company is a manufacturer of nuts and bo1ts that also uses the accrual method to account for its sales. Each company has a personnel de
> Neal uses the percentage of completion method to report his gross income from long-term contracts that were to begin in 2018. In 2019, he completes a contract for more than the estimate of total costs that was used in the prior year. What are the tax acc
> Which of the following statements regarding the self-employment tax is true? a. Income and expenses from self-employment are reported on Schedule D (Form 1040). b. Self-employment income is subject to both Federal income tax and self employment tax. c. O
> Nathan uses the percentage of completion method to report income from his real estate construction contracts. A contract was begun in 2018 and completed in 2019. In 2018, Nathan reported gross income from the partial completion of the contract. In 2019,
> In December 2018, Carl Corporation sold land it held as an investment. The Corporation received $50,000 in 2018 and a note payable (with adequate interest) for $150,000 to be paid in 2020. Carl Corporation's cost of the land was $80,000. The corporation
> On June 1, 2016, Father sold land to Son for $300,000. Father reported the gain by the installment method, with the gain to be spread over five years. In May 2018, Son received an offer of $400,000 for the land, to be paid over three years. What would be
> Samantha an accrual basis taxpayer, subscribe to a service that updates a database used in her business. In December 2018, Samantha paid the $120,000 subscription for the period January 2018 through December 2019. What is Samantha's deduction for 2018?
> David R. and Ella M. Cole (ages 39 and 弛， respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a self-employed consultant specializing in retail management, and Ella is a dental
> Beth R. Jordan lives at 2322 Sky view Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax pract
> Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Alice's birthday is September 21, 1971, and Bruce's is June 27, 1970. They live at 473 Revere Avenue, L
> Glen and Diane Okumura (both age 48) are married, file a joint return, and live at 39 Kaloa Street, Honolulu, HI 96815. Glen's Social Security number is 111-11-1111, and Diane's is 123-45-6789. The Okumuras have two dependent children, Amy (age 15) and J
> Justin Stone was an employee of DataCare Services, Inc. His salary was $45,000 through November 10, 2018, when he was laid off. DataCare Services provided medical insurance for Justin and his family during his employment and agreed to continue this cover
> Paul Barrone is a graduate student at State University. His 10-year-old son, Jamie, lives with him, and Paul is Jamie's sole support. Paul's wife died in 2017, and Paul has not remarried. Paul received $320,000 of life insurance proceeds (related to his
> Which of the following would preclude a taxpayer from deducting student loan interest expense? a. The total amount paid is $1,000 b. The taxpayer is single with AGI of $55,000. c. The taxpayer is married filing jointly with AGI of $120,000 d. The taxpaye
> Tom and Alice Honeycutt, ages 45 and 46, respectively, live at 101 Glass Road, Delton, MI 49046. Tom is a county employee, and Alice is a self-employed accountant. Tom's Social Security number is 111-11-1111; Alice's Social Security number is 123-45-6789
> Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1112. Devon does not want $3 to go to the Presidential Election Campaign Fund. Devon's wife, Ariane, passed away in 2014. Devon's son
> John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony
> Alton Newman, age 67, is married and files a joint return with his wife, Clair, age 65. A1ton and C1air are both retired, and during 2018, they received Social Security benefits of $10,000. Both Alton and Clair are covered by Medicare. Alton's Social Sec
> John Smith, age 31, is single and has no dependents. At the beginning of 2018, John started his own excavation business and named it Earth Movers. John lives at 1045 Center Street, Lindon, UT, and his business is located at 381 State Street, Lindon, UT.
> Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxp
> John and Mary Jane Diaz are married, filing jointly. Their address is 204 Shoe Lane, Blacksburg, VA 24061. John is age 35, and Mary Jane is age 30. They are expecting their first child in early 2019. John's salary in 2018 was $105,000, from which $20,800
> Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield， 1L 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daught
> Robert A Kliesh, age 417 is single and has no dependents. Robert's Social security number is 111-11-1112. His address is 201 Front Street, Missoul a, MT 59812. He does not contribute to the Presidential Election Campaign fund through the Form 1040. Rober
> Kurstie received a $800 state income tax refund this year. Kurstie deducted $3,000 of state income taxes paid in the prior year as part of her itemized deductions Which of the following statements regarding the taxability of Kurstie's refund is true? a.
> Mason Phillips, age 45, and his wife, Ruth, live at 230 Wood Lane, Salt Lake City, UT 84101. Mason's Social Security number is 111-11-1111. Ruth's Social Security number is 123-45-6789. Mason and Ruth are cash basis taxpayers and had the following items
> Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing Services located near the campus of Florida Atlantic University at 1986 Campus Drive. Jane is a material partic
> Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2016. He lives at 4680 Dogwood Lane, Springfield， MO 65801. He is employed as a paralegal by a local law firm. During 2018, he had the following receipts: Logan inherited
> Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6789. Ashley is single and has a 20-year-old son, Bill His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill s
> Tim and Sarah Lawrence are married and file a joint return. Tim's Social Security number is 123-45-6789, and Sarah's Social Security number is 111-11-1111. They reside at 100 Olive Lane, Covington, LA 70434. They have two dependent children, Sean and Deb
> Addison Parker (Social Security number 123-45-6785), single and age 32, lives at 3218 Columbia Drive, Spokane, WA 99210. She is employed as regional sales manager by VITA Corporation, a manufacturer and distributor of vitamins and food supplements. Addis
> 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 born on January 15, 1967, and Freida w
> Cecil C. Seymour is a 64-year-old widower. He had income for 2018 as follows: The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payment of $450. Cecil has received 22 payments through 2018. Cecil's 40-year-ol
> Andre acquired a computer on March 3, 2018, for $2,800. He elects the straight line method for cost recovery Andre does not elect immediate expensing under 179. He does not claim any available additional first -year depreciation. Calculate Andre's cost r
> 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, 2018, Bigham sold the following customer contracts: Determ
> Sydney, a single taxpayer, had $80,000 in adjusted gross income in year 2. During the year, she contributed $15,000 to her church. She also had a $17,000 contribution carryover from her year 1 church contributions. What is the maximum amount of charitabl
> Paul and Sonja, who are married, had itemized deductions of $13,200 and $400, respectively during 2018. Paul suggests that they file separately he will itemize his deductions from AGI, and she will claim the standard deduction a. Evaluate Paul's suggesti
> On January 1, 2018, 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 $50,0
> Ava and her husband, Leo, file a joint return and are in the 24% tax bracket in 2018. Ava's employer offers a child and dependent care reimbursement plan that allows up to $5,000 of qualifying expenses to be reimbursed in exchange for a $5,000 reduction
> Compute the 2018 AMT exemption for the following taxpayers. a. Bristol, who is single, reports AMTI of $650,000. b. Marley and Naila are married and file a joint tax return. Their AMTI is $1,528,000.
> Derek, a cash basis, unmarried taxpayer, had $610 of state income tax withheld during 2018. Also in 2018, Derek paid $50 that was due when he filed his 2017 state income tax return and made estimated payments of $100 toward his 2018 state income tax liab
> Samuel and Annamaria are married, file a joint return, and have three qualifying children. In 2018, they earn wages of $34,000 and no other income Determine the amount of their earned income credit for 2018.
> Lara uses the standard mi1eage method for determining auto expenses. During 2018, she used her car as follows: 9,000 miles for business, 2,000 miles for personal use, 2,500 miles for a move to a new job, 1,000 miles for charitable purposes, and 500 mi1es
