Question: Retish is a 10% partner in a

> Determine the tax liability, marginal tax rate, and average tax rate (rounded to two decimal places) in each of the following cases. Use the tax tables to determine tax liability. a. Single taxpayer, taxable income of $38,862: Liability = __________

> Havel and Petra are married and will file a joint tax return. Havel has W-2 income of $45,588, and Petra has W-2 income of $47,229. What is their tax liability? Determine their tax liability using both the tax tables and the tax rate schedule.

> Cameron is single and has taxable income of $88,806. Determine his tax liability using the tax tables and using the tax rate schedule. Why is there a difference between the two amounts?

> Cindy Byrd donated stock (capital gain property) to a public charity that she has long sup-ported. She purchased the stock 4 years ago for $100,000, and on the date of the gift, it had a fair market value of $300,000. What is her maximum charitable contr

> What are the five filing statuses that are permitted on a Form 1040?

> Use the information in Problem 51. What education tax credits are available if Walt and Deloris report modified AGI of $119,700? Does your answer change if Tiffany is taking one class a semester (is less than a half-time student) and not taking classes i

> Niles and Marsha adopted an infant boy (a U.S. citizen). They paid $15,500 in 2018 for adoption-related expenses. The adoption was finalized in early 2019. Marsha received $3,000 of employer-provided adoption benefits. For question (a), assume that any a

> In 2019, Jeremy and Celeste, who file a joint return, paid the following amounts for their daughter, Alyssa, to attend the University of Colorado during academic year 2019–2020. Alyssa was in her first year of college and attended full-time. Tuition an

> In 2015 through 2018, Korey, who is single, borrowed a total of $25,000 for higher education expenses on qualified education loans. In 2019, while still living at home and being claimed by his parents as a dependent, he began making payments on the loan.

> When an individual who is single has taxable income of $60,000, the tax rate on qualified dividends is a. 0%. b. 25%. c. 15%. d. 5%. 26. Graciela, who is single, reported itemized deductions of $12,100 on her 2018 tax return. Her itemized deductions inc

> A single taxpayer is 26 years old and has wages of $18,000 and interest income of $450. Which Form 1040 Schedule must the taxpayer use? a. Schedule 1. b. Schedule 2. c. Schedule 3. d. The taxpayer does not need to use a Schedule. 17. Which Schedule must

> Jennifer and Paul, who file a joint return, have taxable income of $82,825 and the following tax liability: Their marginal tax rate is: a. 10%. b. 12%. c. 13% d. 22%. 2. Jennifer and Paul, who file a joint return, have taxable income of $82,825 and the

> Eric exchanged land used in his business with Geoff for another lot of land. Eric exchanged the land with a $75,000 FMV and $45,000 basis along with $15,000 cash. Geoff’s basis in his land is $60,000, and the FMV is $90,000. Which of the following statem

> Allie and Buddy are married, file a joint return, and have one son, Zack, age 5. Buddy has earned income of $47,000, and Allie was a full-time student for eight months (with no income). They paid a qualified child care center $3,450. How much is Allie an

> During 2019, Raul incurred and paid the following expenses: Prescription drugs ……………………………………………………….……… $ 470 Vitamins and over-the-counter cold remedies …………………………… 130 Doctor and dentist visits …………………………………………………………. 700 Health club fee ………………………………

> Jamison is a single dad with two dependent children: Zoey, age 7, and Conner, age 3. He has an AGI of $39,000 and paid $4,300 to a qualified day care center for the two children. What amount can Jamison receive for the child and dependent care credit? a.

> Which of the following increases a taxpayer’s at-risk amount? a. Cash distributions. b. Property distributions. c. Increased share of liabilities. d. Loss items.

> In 2016 Grant purchased land for $103,000 for use in his business. He sold it in 2019 for $114,000. What are the amount and type of gain on this sale before netting any other gains and/or losses? a. $11,000 § 1231 gain. b. $11,000 ordinary gain. c. $11,0

> Chen received a $10,000 dividend from a Subchapter C corporation. He also owns a 50% interest in a Subchapter S corporation that reported $100,000 of taxable income. He received a distribution of $20,000 from the Subchapter S corporation. How much income

> Which of the following statements concerning the shareholders of a Subchapter S corporation is correct? a. Shareholders are taxed on their proportionate share of earnings that are distributed. b. Shareholders are taxed on the distributions from the corp

> Which of the following statements is incorrect? a. An S corporation can own stock of a C corporation. b. A C corporation can own stock of an S corporation. c. An S corporation can be a partner in a partnership. d. An estate can own stock of an S corpora

> Which of the following items increase basis for a stockholder of a Subchapter S corporation? a. Capital contributions. b. Charitable contributions. c. Net losses. d. Distributions from the corporation.

> Concerning the business interest expense deduction, which of the following statements is true? a. Disallowed interest expense can be carried forward indefinitely. b. The interest expense deduction cannot exceed 30% of adjusted taxable income. c. The int

> Banana Company is widely held. It owns 85% of Strawberry Corporation. Two individuals hold the remaining 15%. Which of the following statements is true? a. Banana and Strawberry must file a consolidated tax return. b. Banana and Strawberry can elect to

> Which of the following is a positive adjustment on Schedule M-1? a. Excess of capital losses over capital gains. b. Excess of capital gains over capital losses. c. Charitable contribution carryover to the current year. d. Depreciation for taxes in exces

> Explain the rules associated with the carryback and carryforward of net operating losses created in 2017.

> Which of the following is a negative adjustment on Schedule M-1? a. Federal income tax. b. Charitable contributions in excess of the 10% limit. c. Depreciation for books in excess of depreciation for taxes. d. Tax-exempt interest income.

> Parker Company has earnings and profits of $8,000. It distributes capital gain property with a basis of $2,000 and FMV of $9,000 to Gertrude Parker, its sole shareholder. Gertrude has a basis of $10,000 in her stock. Which of the following statements is

> Which, if any, of the following statements concerning the shareholders of a Subchapter C corporation is correct? a. Shareholders are taxed on their proportionate share of earnings and profits as they are earned. b. Shareholders are taxed on distribution

> A calendar-year corporate taxpayer must make its final estimated tax payment on the 15th of which month? a. November. b. December. c. January. d. February.

> Which of the following statements is false? a. A corporation with average sales in excess of $26,000,000 must use the accrual method of accounting. b. The charitable contributions of a corporation may be limited. c. A corporation may be entitled to a de

> For Subchapter C corporations, which of the following statements is true? a. Capital losses can be carried back three years and then carried forward five years. b. Corporations can elect to forgo the carryback period for capital losses and only carry th

> Mountain Company owns 25% of Valley Company. Both are domestic corporations. Valley pays a $60,000 dividend to Mountain. What amount of dividend income will be included in the taxable income of Mountain Company? a. $15,000. b. $21,000. c. $39,000. d. $6

> Annabelle forms a corporation in which she is the sole shareholder. She transfers $20,000 cash plus land with a $100,000 adjusted basis and a $160,000 FMV in exchange for all the stock of the corporation. The corporation assumes the $140,000 mortgage on

> Svetlana forms a corporation in which she is the sole shareholder. She contributes a vehicle with a basis of $15,000 and an FMV of $8,000 in exchange for stock. She also contributes cash of $2,000. Svetlana will recognize a. A $5,000 loss. b. A $7,000 l

> Tameka and Janelle form a corporation in which each will own 50% of the stock. Tameka contributes $50,000 in cash. Janelle contributes property with a basis of $30,000 and an FMV of $60,000. She receives $10,000 of inventory from the corporation. Which o

> Explain the net operating loss rules for 2018 and later.

> Two individuals form a corporation and own all of its stock. One individual contributes cash, and the other contributes property encumbered by a mortgage. The new corporation assumes the mortgage. Which of the following statements is true with respect to

> A corporation has a fiscal year-end of July. If the corporation does not receive an automatic extension of time to file its return, the return will be due on the 15th of a. December. b. November. c. October. d. September.

> Which of the following statements is correct? a. A calendar-year corporation must file its tax return no later than March 15 unless it requests an extension. b. A corporation is a legal entity that is taxed on its taxable income. c. Corporations choose

> On November 1, Ashton sells her interest in XYZ Partnership to Wayne for $200,000 cash and a release of liability of $30,000. Ashton’s basis at the beginning of the year was $125,000 (including the $30,000 of liability). Ashton’s share of income through

> All of the following statements are correct concerning liquidating distributions of a partnership except: a. A loss can never be recognized. b. A distribution of money in excess of basis causes a gain to be recognized. c. Basis in a property distributio

> Katlin contributes land to a partnership with a basis of $44,000 and an FMV of $56,000 in 2017. In 2019, when the FMV of the land is $58,000, the partnership distributes the land to Baily, another partner. Which of the following is true? a. Katlin recog

> Molly, a 30% partner in XYZ Partnership, has a basis of $55,000 in her partnership interest. She receives a cash distribution of $54,000 at year-end. The distribution has what tax effect on Molly? a. No gain or loss is recognized, and she has a $55,000

> Partner Beth has a basis of $10,000 in a partnership at the beginning of the year. She receives $6,000 in cash distributions, her distributive share of income is $5,000, and she receives a land distribution with a basis of $8,000 (FMV $20,000). What is B

> All of the following items usually affect the basis of a partnership interest except: a. Cash or property contributed. b. Guaranteed payments. c. Partnership income or loss items. d. A partner’s share of recourse liabilities.

> Maggie and Davis are equal partners in a partnership. When forming the partnership, Davis contributed a building with an FMV of $550,000 and a basis of $175,000. During the first year of operations, the partnership earned $170,000 in ordinary income and

> The amount of savings bond interest exempt from tax is limited when an individual is single and his or her AGI reaches a. $121,600. b. $81,100. c. $79,550. d. $96,100.

> The calculation of a partner’s basis in his or her partnership interest is mandatory in which of the following situations? a. In a partnership loss year. b. At the liquidation or disposition of a partner’s interest. c. When the partner receives non liqu

> A partner’s share of ordinary income or loss and separately stated items is reported to the partner via what form? a. Form 1065. b. Form 1040, Schedule SE. c. Form 1065, Schedule K-1. d. Form 1065, Schedule D.

> Which of the following items from a partnership go into the calculation of a partner’s self- employment income? a. Rental income. b. Dividend income. c. Interest income. d. § 179 expense.

> All of the following are considered separately stated items to a partnership except: a. Charitable contributions. b. § 179 expense. c. Depreciation. d. Capital gains and losses.

> Styron is a partner in Styron, Lee, & Jane Partnership. Styron owned 25% from January 1, 2019, to June 30, 2019, when he bought Lee’s 25% interest. He owned 50% for the rest of the year. The partnership had ordinary income of $88,000 and $12,000 in long-

> Which of the following is considered when calculating ordinary income for a partnership? a. Dividend income. b. § 179 expense. c. Guaranteed payments to partners. d. Capital gains and losses.

> Shelly contributed the following business assets to S&S Partnership on March 3, 2019: Basis FMV Date Purchased by Shelly Equipment $75,000 $ 45,000 07/01/18 Acct. Rec. $ 0 $100,000 Various What is the basis in the equipment and t

> Allie contributed the following business assets to ASW Partnership on August 1, 2019: What is the holding period for the building and the inventory to ASW Partnership? a. Building—long-term capital or § 1231 asset. b. Bui

> Jake has a Schedule C with the following assets: Jake contributes these assets to form AJ Partnership and receives a 50% interest. AJ’s basis in the assets is: a. Cash $4,500; A/R $0; building $155,000. b. Cash $4,500; A/R $10,000; b

> For 2019, how can the amount of the sales tax deduction be determined?

> George and Debbie were legally married on December 31, 2019. Can they file their 2019 income tax return using the status of married filing jointly? Why or why not? What other filing status choices do they have, if any?

> Find the APR, or stated rate, in each of the following cases:

> Find the EAR in each of the following cases:

> In the previous problem, suppose a sales associate told you the policy costs $525,000. At what interest rate would this be a fair deal? Problem 10: The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your he

> The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 5.6 percent, how much will you pay for the policy?

> Mendez Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? Year ………………….. Cash Flow 1 ……………………

> You’re trying to save to buy a new $275,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.8 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

> According to the Census Bureau, in October 2019, the average house price in the United States was $368,600. In October 2000, the average price was $197,700. What was the annual increase in the price of the average house sold?

> At 4.3 percent interest, how long does it take to double your money? To quadruple it?

> Assume the total cost of a college education will be $325,000 when your child enters college in 18 years. You presently have $85,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college educat

> Solve for the unknown number of years in each of the following:

> Given the following information for Troiano Pizza Co., calculate the depreciation expense: Sales = $76,800; Costs = $36,900; Addition to retained earnings = $6,800; Dividends paid = $2,370; Interest expense = $5,300; Tax rate = 22 percent.

> Solve for the unknown interest rate in each of the following:

> For each of the following, compute the present value:

> You expect to receive $10,000 at graduation in two years. You plan on investing it at 11 percent until you have $60,000. How long will you wait from now?

> For each of the following, compute the future value:

> Suppose you are still committed to owning a $275,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 years (on the day you turn 30), how much must you invest t

> Refer back to the Series EE savings bonds we discussed at the very beginning of the chapter. a. Assuming you purchased a $50 face value bond, what is the exact rate of return you would earn if you held the bond for 20 years until it doubled in value? b.

> The “Brasher doubloon,” which was featured in the plot of the Raymond Chandler novel, The High Window, was sold at auction in 2018 for a reported $5.5 million. The coin had a face value of $15 when it was first issued in 1787 and had been previously sold

> In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2019, the winner’s check was $2.25 million. What was the percentage increase per year in the winner’s check over this period? If the winner’s prize increases a

> You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 80 years from now. What is the present value of you

> Imprudential, Inc., has an unfunded pension liability of $450 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 5.2 per

> Nightwish Corp. shows the following information on its 2021 income statement: Sales = $336,000; Costs = $194,700; Other expenses = $9,800; Depreciation expense = $20,600; Interest expense = $14,200; Taxes = $21,275; Dividends = $21,450. In addition, you’

> First City Bank pays 7.5 percent simple interest on its savings account balances, whereas Second City Bank pays 7.5 percent interest compounded annually. If you made a deposit of $8,600 in each bank, how much more money would you earn from your Second Ci

> Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. What is the projecte

> The most recent financial statements for Tran Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum dollar increase in sal

> For the company in Problem 6, what is the sustainable growth rate? Problem 6: The most recent financial statements for Mandy Co. are shown here: Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 p

> The most recent financial statements for Mandy Co. are shown here: Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. What is the internal growth rate?

> The most recent financial statements for Assouad, Inc., are shown here: Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with ever

> The most recent financial statements for Mixton, Inc., are shown here: Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,400 was paid, and the company wishes to maintain a constant payout ratio. Next yearâ&#128

> Based on the result in Problem 30, show that the internal and sustainable growth rates are as given in the chapter. Problem 30: Define the following: S = Previous year’s sales A = Total assets E = Total equity g = Projected growth in sales PM = Profit

> The most recent financial statements for Camryn, Inc., are shown here (assuming no income taxes): Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,164

> Tinsley, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .55. The profit margin is 6.2 percent, and the ratio of total assets to sales is constant at 1.05. Is this growth rate possible? To answer, determine what t

> Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.4 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $945,

> Redo Problem 26 using sales growth rates of 30 and 35 percent in addition to 20 percent. Assume the firm wishes to maintain its debt-equity ratio. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine th

> Redo Problem 24 using sales growth rates of 15 and 25 percent in addition to 20 percent. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. At what growth rate is the EF

> In Problem 24, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain c

> In Problem 24, suppose the firm was operating at only 80 percent capacity in 2020. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will rema

> The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current

> Calculate the internal growth rate for the company in Problem 22. Now calculate the internal growth rate using ROA × b for both beginning of period and end of period total assets. What do you observe? Problem 22: Deprey, Inc., had equity of $153,000 at

> Deprey, Inc., had equity of $153,000 at the beginning of the year. At the end of the year, the company had total assets of $215,000. During the year, the company sold no new equity. Net income for the year was $29,000 and dividends were $6,400. What is t

> You’ve collected the following information about Caccamisse, Inc.: Sales = $255,000 Net income = $19,200 Dividends = $7,500 Total debt = $67,000 Total equity = $77,000 What is the sustainable growth rate for the company? If it does grow at this rate, how