All Related Questions of Capital Gain

Q: Bartman Industries’ and Reynolds Inc.’s stock prices and dividends,

Bartman Industries’ and Reynolds Inc.’s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2003–2008. Th...

Q: Jeremy earned $100,000 in salary and $6,

Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $17,00...

Q: During 2016, your clients, Mr. and Mrs. Howell

During 2016, your clients, Mr. and Mrs. Howell, owned the following investment assets: a. Go to the IRS web site (www.IRS.gov) and download the most current version of Form 8949 and Schedule D. Use Fo...

Q: What is the deciding factor in determining whether a capital gain is

What is the deciding factor in determining whether a capital gain is a short-term or long-term capital gain?

Q: Grayson is in the 25 percent tax rate bracket and has the

Grayson is in the 25 percent tax rate bracket and has the sold the following stocks in 2016: a. What is Grayson’s net short-term capital gain or loss from these transactions? b. What...

Q: Shaun bought 300 shares of Dental Equipment, Inc. several years

Shaun bought 300 shares of Dental Equipment, Inc. several years ago for $10,000. Currently the stock is worth $8,000. Shaun’s marginal tax rate this year is 25 percent, and he has no other capital gai...

Q: Becky recently discovered some high-tech cooking technology that has advantages

Becky recently discovered some high-tech cooking technology that has advantages over microwave and traditional ovens. She received a patent on the technology that gives her exclusive rights to the tec...

Q: On January 1 of year 1, Nick and Rachel Sutton purchased

On January 1 of year 1, Nick and Rachel Sutton purchased a parcel of undeveloped land as an investment. The purchase price of the land was $150,000. They paid for the property by making a down payment...

Q: Dahlia is in the 28 percent tax rate bracket and has purchased

Dahlia is in the 28 percent tax rate bracket and has purchased the following shares of Microsoft common stock over the years: If Dahlia sells 800 shares of Microsoft for $40,000 on December 20, 2016,...

Q: Henrich is a single taxpayer. In 2016, his taxable income

Henrich is a single taxpayer. In 2016, his taxable income is $425,000. What is his tax liability (including the net investment income tax) in each of the following alternative scenarios? a. All of his...

Q: WAR (We Are Rich) has been in business since 1983

WAR (We Are Rich) has been in business since 1983. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs...

Q: Fizbo Corporation is in the business of breeding and racing horses.

Fizbo Corporation is in the business of breeding and racing horses. Fizbo has taxable income of $5,000,000 other than from these transactions. It has nonrecaptured §1231 losses of $10,000 from 2012 an...

Q: Dakota Conrad owns a parcel of land he would like to sell

Dakota Conrad owns a parcel of land he would like to sell. Describe the circumstances in which the sale of the land would generate §1231 gain or loss, ordinary gain or loss, or capital gain or loss. A...

Q: Maria has all of her stock in Mayan Corporation redeemed. Under

Maria has all of her stock in Mayan Corporation redeemed. Under what conditions will Maria treat the redemption as an exchange and recognize capital gain or loss?

Q: Tiny and Tim each own half of the 100 outstanding shares of

Tiny and Tim each own half of the 100 outstanding shares of Flower Corporation. This year Flower reported taxable income of $6,000 and was subject to a 25 percent tax rate. In addition, Flower receive...

Q: Petoskey Stone Quarry, Inc. (PSQ), a calendar year

Petoskey Stone Quarry, Inc. (PSQ), a calendar year, accrual basis C Corporation, provides landscaping supplies to local builders in northern Michigan. PSQ has always been a family owned business and h...

Q: Lanco Corporation, an accrual-method corporation, reported taxable income

Lanco Corporation, an accrual-method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items: • MACRS depreciation of $200,...

Q: While James Craig and his former classmate Paul Dolittle both studied accounting

While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specialize...

Q: Brady Corporation is a Nebraska Corporation, but owns business and investment

Brady Corporation is a Nebraska Corporation, but owns business and investment property in surrounding states as well. Determine the state where each item of income is allocated. a. $15,000 of dividend...

Q: Phred Phortunate won his state lotto two years ago. His lotto

Phred Phortunate won his state lotto two years ago. His lotto ticket was worth $10 million, which was payable in 20 annual installments of $500,000 each. Phred paid $1 for the winning ticket. The lott...

Q: Paris Corporation holds a $100,000 unrealized net capital gain

Paris Corporation holds a $100,000 unrealized net capital gain and a capital loss carryforward that will expire in the current year. Paris is subject to a 14 percent cost of capital. Its marginal tax...

Q: Compare and contrast the general rule for determining the amount of the

Compare and contrast the general rule for determining the amount of the charitable contribution if the corporation contributes capital gain property versus ordinary income property.

Q: Paladin, Inc. reported taxable income of $1,000

Paladin, Inc. reported taxable income of $1,000,000 this year and paid federal income taxes of $340,000. The company reported a capital gain from sale of investments of $150,000, which was partially...

Q: Consider a 3.5 percent TIPS with an issue CPI reference

Consider a 3.5 percent TIPS with an issue CPI reference of 185.6. At the beginning of this year, the CPI was 193.5 and was at 199.6 at the end of the year. What was the capital gain of the TIPS in dol...

Q: Consider a 2.25 percent TIPS with an issue CPI reference

Consider a 2.25 percent TIPS with an issue CPI reference of 187.2. At the beginning of this year, the CPI was 197.1 and was at 203.8 at the end of the year. What was the capital gain of the TIPS in...

Q: Compute Emily’s 2017 taxable income on the basis of the following information

Compute Emily’s 2017 taxable income on the basis of the following information. Her filing status is single. Salary………………………………………………………………………………………………………………. $85,000 Interest income from bonds is...

Q: Here is a quote from an investment website about an investment strategy

Here is a quote from an investment website about an investment strategy using options: One strategy investors are applying to the XYZ options is using “synthetic stock.”Asynthetic stock is created whe...

Q: Beth acquired only one tract of land seven years ago as an

Beth acquired only one tract of land seven years ago as an investment. In order to sell the land at a higher price, she decides to subdivide it into 20 lots. She pays for improvements such as clearing...

Q: Mr. and Mrs. Dunbar have taxable income of $260

Mr. and Mrs. Dunbar have taxable income of $260,000 without considering the following sales. Consider the following independent cases where capital gains are recognized and determine the marginal tax...

Q: Lynette, a famous basketball player, is considering the possibility of

Lynette, a famous basketball player, is considering the possibility of transferring the sole right to use her name to promote basketball shoes produced and sold by the NIK Corporation. NIK will pay $2...

Q: Phil, a cash-basis taxpayer, sells the following marketable

Phil, a cash-basis taxpayer, sells the following marketable securities, which are capital assets during 2017. Determine whether the gains or losses are long-term or short-term. Also determine the net...

Q: Wayne is single and has no dependents. Without considering his $

Wayne is single and has no dependents. Without considering his $11,000 adjusted net capital gain (ANCG), his taxable income, which includes no investment income, in 2017 is as follows: a. What is Wayn...

Q: In 2017, Kathleen Tweardy incurs $30,000 of interest

In 2017, Kathleen Tweardy incurs $30,000 of interest expense related to her investments. Her investment income includes $7,500 of interest, $6,000 of qualified dividends, and a $12,000 net capital gai...

Q: Helen Derby borrowed $150,000 to acquire a parcel of

Helen Derby borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During the current year, she reported AGI of $90,000 and paid interest of $12,000 on the loan. Other items...

Q: In the current year, an individual taxpayer has net long-

In the current year, an individual taxpayer has net long-term capital gain from disposition of capital assets and has unrecaptured § 1250 gain. What would the circumstances have to be for the unrecapt...

Q: Asok’s AGI for 2017 is $133,050. Included in

Asok’s AGI for 2017 is $133,050. Included in this AGI is a $45,000 25% long-term capital gain and a $13,000 0%/15%/20% long-term capital gain. Asok is single, uses the standard deduction, and has only...

Q: John (a sole proprietor) and Eagle Corporation (a C

John (a sole proprietor) and Eagle Corporation (a C corporation) each recognize a long-term capital gain of $10,000 and a short-term capital loss of$18,000 on the sale of capital assets. Neither taxpa...

Q: Janice is the sole owner of Catbird Company. In the current

Janice is the sole owner of Catbird Company. In the current year, Catbird had operating income of $100,000, a long-term capital gain of $15,000, and a charitable contribution of $5,000. Janice withdre...

Q: Ellie and Linda are equal owners in Otter Enterprises, a calendar

Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition...

Q: In the current year, Tanager Corporation (a C corporation)

In the current year, Tanager Corporation (a C corporation) had operating income of $480,000 and operating expenses of $390,000. In addition, Tanager had a long-term capital gain of $55,000 and a short...

Q: Virginia owns 100% of Goshawk Company. In the current year

Virginia owns 100% of Goshawk Company. In the current year, Goshawk Company sells a capital asset (held for three years) at a loss of $40,000. In addition, Goshawk has a short-term capital gain of $18...

Q: Stork Corporation (E & P of $850,000)

Stork Corporation (E & P of $850,000) has 1,000 shares of common stock outstanding. The shares are owned by the following individuals: Lana Johnson, 400 shares; Lori Jones (Lana’s mother), 200 shares;...

Q: Your firm has a new individual client, Carla Navarro, who

Your firm has a new individual client, Carla Navarro, who has been assigned to you for preparation of the current year’s tax return. Upon review of Carla’s tax returns from prior years, you notice tha...

Q: Thelma inherited land from Sadie on June 7, 2017. The

Thelma inherited land from Sadie on June 7, 2017. The land appreciated in value by 100% during the six months it was owned by Sadie. The value has remained stable during the three months Thelma has ow...

Q: Ida Ross has decided to purchase a new home in a retirement

Ida Ross has decided to purchase a new home in a retirement community for $400,000. She has $50,000 in cash for the down payment but needs to borrow the remaining $350,000 to finance the purchase. Her...

Q: Coline has the following capital gain and loss transactions for 2017.

Coline has the following capital gain and loss transactions for 2017. Short-term capital gain $....................5,000 Short-term capital loss…………………..(2,100) Long-term capital gain (28%)…………..6,00...

Q: Elliott has the following capital gain and loss transactions for 2017.

Elliott has the following capital gain and loss transactions for 2017. Short-term capital gain $......................1,500 Short-term capital loss……………………(3,600) Long-term capital gain (28%)…………..12...

Q: Faith Godwin is a dealer in securities. She has spotted a

Faith Godwin is a dealer in securities. She has spotted a fast-rising company and would like to buy and hold its stock for investment. The stock is currently selling for $2 per share, and Faith thinks...

Q: Dexter owns a large tract of land and subdivides it for sale

Dexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers fo...

Q: Enzo is a single taxpayer with the following gains and losses for

Enzo is a single taxpayer with the following gains and losses for 2017: • $2,100 short-term capital loss. • $24,000 long-term capital gain from sale of stock. • $14,000 § 1231 gain that is all unrec...

Q: Justin Stone was an employee of DataCare Services, Inc. His

Justin Stone was an employee of DataCare Services, Inc. His salary was $45,000 through November 10, 2016, when he was laid off. DataCare Services provided medical insurance for Justin and his family d...

Q: Elaine Case (single with no dependents) has the following transactions

Elaine Case (single with no dependents) has the following transactions in 2017: AGI (exclusive of capital gains and losses)………$240,000 Long-term capital gain………………………………………..22,000 Long-term capital...

Q: In 2017, Bertha Jarow had a $28,000 loss

In 2017, Bertha Jarow had a $28,000 loss from the sale of a personal residence. She also purchased a patent on a rubber bonding process from an individual inventor for $7,000 (and resold it in two mon...

Q: Carla was the owner of vacant land that she was holding for

Carla was the owner of vacant land that she was holding for investment. She paid $2 million for the land in 2015. Raymond was an investor in vacant land. He thought Carla’s land might be the site of a...

Q: Kaiwan, Inc., a calendar year S corporation, is partly

Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $32,000. During the year, Sharrod’s share of a Kaiwan long-term capital gain (LTCG) is $5,000, a...

Q: Greiner, Inc., a calendar year S corporation, holds no

Greiner, Inc., a calendar year S corporation, holds no AEP. During the year, Chad, an individual Greiner shareholder, receives a cash distribution of $30,000 from the entity. Chad’s basis in his stock...

Q: Mary is a shareholder in CarrollCo, a calendar year S corporation

Mary is a shareholder in CarrollCo, a calendar year S corporation. At the beginning of the year, her stock basis is $10,000, her share of the AAA is $2,000, and her share of corporate AEP is $6,000. A...

Q: Zebra, Inc., a calendar year S corporation, incurred the

Zebra, Inc., a calendar year S corporation, incurred the following items this year. Sammy is a 40% Zebra shareholder throughout the year. Operating income………………………………………………………………..$100,000 Cost of go...

Q: BDD Partnership is a service-oriented partnership that has three equal

BDD Partnership is a service-oriented partnership that has three equal general partners. One of them, Barry Evans, sells his interest to another partner, Dale Allen, on December 31 of the current tax...

Q: Assume the same facts as in Problem 22, except that the

Assume the same facts as in Problem 22, except that the trust instrument allocates the capital gain to income. Facts from Problem 22 The Allwardt Trust is a simple trust that correctly uses the calen...

Q: Each of the following items was incurred by Jose, the cash

Each of the following items was incurred by Jose, the cash basis, calendar year decedent. Under the terms of the will, Dora took immediate ownership in all of Jose’s assets, except t...

Q: Loraine (a calendar year taxpayer) reported the following transactions,

Loraine (a calendar year taxpayer) reported the following transactions, all of which were properly included in a timely filed return. a. Presuming the absence of fraud, how much of an omission from...

Q: In 2017, Julie, a single individual, reported the following

In 2017, Julie, a single individual, reported the following items of income and deduction: Salary……………………………………………………………………………$166,000 Interest income…………………………………………………………………14,000 Long-term capital...

Q: a. For purposes of the charitable contribution deduction, what is

a. For purposes of the charitable contribution deduction, what is capital gain property? Ordinary income property? b. What is the significance of classifying property as either capital gain property...

Q: How is the amount of a charitable contribution of capital gain property

How is the amount of a charitable contribution of capital gain property determined if it is donated to a private nonoperating foundation? How does this determination differ if capital gain property is...

Q: During 2017, Karen, a single taxpayer, reports the following

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 Adverti...

Q: During 2017, James, a single, cash method taxpayer incurred

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

Q: Consider the following summary of Sec. 1231 gains and losses recognized

Consider the following summary of Sec. 1231 gains and losses recognized by Janet during the period 2012–2017. Janet had no nonrecaptured Sec. 1231 losses at the beginning of 2012. If...

Q: Which of the following are tax preference items for purposes of computing

Which of the following are tax preference items for purposes of computing the individual AMT? a. Net long-term capital gain b. Excess depreciation for real property placed in service before 1987 c....

Q: Jordan sold a stock that he held for 11 months at a

Jordan sold a stock that he held for 11 months at a capital gain of $10,000. He is in the 25% marginal tax bracket. What taxes will he pay on this gain?

Q: What are capital gains? When is a capital gain considered short

What are capital gains? When is a capital gain considered short term? When is it considered long term? Why is this distinction important?

Q: Lefty completes the following capital asset transactions. Compute Lefty’s recognized capital

Lefty completes the following capital asset transactions. Compute Lefty’s recognized capital gain or loss from these transactions. Long-term gain……….$10,000 Short-term gain……….4,000 Short-term loss……...

Q: Dexter owns a large tract of land and subdivides it for sale

Dexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers fo...

Q: Carla was the owner of vacant land that she was holding for

Carla was the owner of vacant land that she was holding for investment. She paid $2 million for the land in 2013. Raymond was an investor in vacant land. He thought Carla’s land might be the site of a...

Q: Elaine Case (single with no dependents) has the following transactions

Elaine Case (single with no dependents) has the following transactions in 2015: AGI (exclusive of capital gains and losses) $240,000 Long-term capital gain ………………………………………. 22,000 Long-term capital...

Q: Platinum, Inc., has determined its taxable income as $215

Platinum, Inc., has determined its taxable income as $215,000 before considering the results of its capital gain or loss transactions. Platinum has a short- term capital loss of $24,000, a long-term c...

Q: The taxpayer is an antiques collector and is going to sell an

The taxpayer is an antiques collector and is going to sell an antique purchased many years ago for a large gain. The facts and circumstances indicate that the taxpayer might be classified as a dealer...

Q: In 2015, Bertha Jarow (head of household with three dependents

In 2015, Bertha Jarow (head of household with three dependents) had a $28,000 loss from the sale of a personal residence. She also purchased from an individual inventor for $7,000 (and resold in two m...

Q: Dexter owns a large tract of land and subdivides it for sale

Dexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers fo...

Q: Coline has the following capital gain and loss transactions for 2015.

Coline has the following capital gain and loss transactions for 2015. Short-term capital gain $ 5,000 Short-term capital loss (2,100) Long-term capital gain (28%) 6,000 Long-term capital gain (15%)...

Q: Elliott has the following capital gain and loss transactions for 2015.

Elliott has the following capital gain and loss transactions for 2015. Short-term capital gain $ 1,500 Short-term capital loss (3,600) Long-term capital gain (28%) 12,000 Long-term capital gain (2...

Q: Joel (from Problem 1) is in the 25%

Joel (from Problem 1) is in the 25% tax bracket. What amount of taxes will he pay on his capital gain if he held the stock for less than a year? Data from Problem 1: Joel purchased 100 shares of st...

Q: In the current year, Alpha Corporation generated $500,000

In the current year, Alpha Corporation generated $500,000 of ordinary operating income and incurred a $20,000 capital loss on the sale of marketable securities from its investment portfolio. Alpha exp...

Q: Because of its quality investments, Carolina Corporation has always generated 30

Because of its quality investments, Carolina Corporation has always generated 30% to 40% of its gross income from passive sources. In the current year, Carolina sold a block of stock in a company it a...

Q: Which of the following income items, when received by a corporation

Which of the following income items, when received by a corporation, are included in personal holding company income (PHCI)? Indicate whether any special circumstances would exclude an income item tha...

Q: Alice and Barry own all the shares of Alpha Corporation. For

Alice and Barry own all the shares of Alpha Corporation. For the current year, the corporation reports the following income and expenses: During the eighth month of the current year, Alpha Corporatio...

Q: Howard Corporation conducts a manufacturing business and has a compelling need to

Howard Corporation conducts a manufacturing business and has a compelling need to accumulate earnings. Its January 1, E&P balance is $600,000. It reports the following operating results for the curren...

Q: Explain why a shareholder receiving a liquidating distribution would prefer to receive

Explain why a shareholder receiving a liquidating distribution would prefer to receive either capital gain treatment or ordinary loss treatment.

Q: Meridian Corporation originally was owned equally by five individual shareholders. Four

Meridian Corporation originally was owned equally by five individual shareholders. Four years ago, Meridian adopted a plan of liquidation, and each shareholder received a liquidating distribution. Tin...

Q: Sarah plans to invest $1 million in a business venture that

Sarah plans to invest $1 million in a business venture that will last five years. She is debating whether to operate the business as a C corporation or a sole proprietorship. If a C corporation, she w...

Q: Using the facts from Problem C:8-70 below,

Using the facts from Problem C:8-70 below, calculate the tax liabilities of Flying Gator and T Corporations for 2016. How much larger (or smaller) would be the total of the two separate return tax lia...

Q: An affiliated group elects to file a consolidated tax return. Explain

An affiliated group elects to file a consolidated tax return. Explain why the group’s consolidated capital gain net income or net capital loss is not merely the sum of the members’ separate capital ga...

Q: Mark and Pamela are equal partners in MP Partnership. The partnership

Mark and Pamela are equal partners in MP Partnership. The partnership, Mark, and Pamela are calendar year taxpayers. The partnership incurred the following items in the current year: Sales……………………………...

Q: On January of the current year, Becky (20%), Chuck

On January of the current year, Becky (20%), Chuck (30%), and Dawn (50%) are partners in the BCD Partnership. During the current year, BCD reports the following results. All items occur evenly through...

Q: Clark sold securities for a $50,000 short-term

Clark sold securities for a $50,000 short-term capital loss during the current year, but he has no personal capital gains to recognize. The C&L General Partnership, in which Clark has a 50% capita...

Q: Kate, Chad, and Stan are partners in the KCS Partnership

Kate, Chad, and Stan are partners in the KCS Partnership, which operates a manufacturing business. The partners formed the partnership ten years ago with Kate and Chad each as general partners having...

Q: Allen and Bob are equal partners in the AB Partnership. Bob

Allen and Bob are equal partners in the AB Partnership. Bob manages the business and receives a guaranteed payment. What amount and character of income will Allen and Bob report in each of the followi...

Q: Pam and Susan own the PS Partnership. Pam takes care of

Pam and Susan own the PS Partnership. Pam takes care of daily operations and receives a guaranteed payment for her efforts. What amount and character of income will each partner report in each of the...

Q: Last year, Patty contributed land with a $4,000

Last year, Patty contributed land with a $4,000 basis and a $10,000 FMV in exchange for a 40% profits, loss, and capital interest in the PD Partnership. Dave contributed land with an $8,000 basis and...

Q: Define each of the following terms: a. Annual

Define each of the following terms: a. Annual report; balance sheet; income statement b. Common stockholders’ equity, or net worth; retained earnings c. Statement of stockholders’ equity; statement...

Q: Rena purchased 200 shares of a no-load stock mutual fund

Rena purchased 200 shares of a no-load stock mutual fund. During the year she received $3 per share in dividend distributions, $200 in long-term capital gain distributions, and capital gains of $1,100...

Q: Ronnie owns 600 shares of a stock mutual fund. This year

Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of 60 stock mutual fund shares ($40 per share) and long-term capital gain distributions of 45 stock mutual f...

Q: Mike and Nancy are equal shareholders in MN Corporation, an S

Mike and Nancy are equal shareholders in MN Corporation, an S corporation. The corporation, Mike, and Nancy are calendar year taxpayers. The corporation has been an S corporation during its entire exi...

Q: Assume the same facts as in Problem C:11-42

Assume the same facts as in Problem C:11-42. Assume further that Raider Corporation reports $75,000 of ordinary income, $20,000 of tax-exempt income, and a $25,000 long-term capital gain in the next y...

Q: For each of the following items, indicate whether the item will

For each of the following items, indicate whether the item will increase, decrease, or cause no change in the S corporation’s ordinary income (loss), AAA, and in the shareholder’s stock basis. The cor...

Q: Sigma Corporation, an S corporation with one shareholder, incurred the

Sigma Corporation, an S corporation with one shareholder, incurred the following items Year 1 and Year 2: At the beginning of Year 1, the corporation had AAA and OAA balances of zero and accumulated...

Q: Three individuals recently formed Krypton Company as a limited liability company (

Three individuals recently formed Krypton Company as a limited liability company (LLC). The three individuals—Jeff, Susan, and Richard—own equal interests in the company, and they all have substantial...

Q: Mark Green and his brother Michael purchased land in Orlando, Florida

Mark Green and his brother Michael purchased land in Orlando, Florida many years ago. At that time, they began their investing as Green Brothers Partnership with capital they obtained from placing sec...

Q: Refer to the facts in Comprehensive Problem C:6­54

Refer to the facts in Comprehensive Problem C:6­54. Now assume the entity is a partnership named Lifecycle Partnership. Additional facts are as follows: • Except for precontribution gains and losses,...

Q: Amy, a one­third partner, retires from the AJS

Amy, a one­third partner, retires from the AJS Partnership on January 1 of the current year. Her basis in her partnership interest is $120,000 including her share of liabilities. Amy receiv...

Q: Austin & Becker is an electing large partnership. During the current

Austin & Becker is an electing large partnership. During the current year, the partnership has the following income, loss, and deduction items: Ordinary income………………………………………………….$5,200,000 Rental lo...

Q: Refer to the previous problem. Assume Frank subsequently commits fraud with

Refer to the previous problem. Assume Frank subsequently commits fraud with respect to his Year 1 return as late as October 8 of Year 3. When does the limitations period for charging Frank with crimin...

Q: Refer to the preceding problem. Assume that Ed expects his income

Refer to the preceding problem. Assume that Ed expects his income for this year to decline and his tax liability for this year to be only $15,000. What minimum amount of estimated taxes should Ed pay...

Q: Frank, a calendar year taxpayer, reports $100,000

Frank, a calendar year taxpayer, reports $100,000 of gross income and $60,000 of taxable income on his Year 1 return, which he files on March 12 of Year 2. He fails to report on the return a $52,000 l...

Q: A simple trust had a long-term capital loss of $

A simple trust had a long-term capital loss of $10,000 for 2016 and a long-term capital gain of $15,000 for 2017. Its net accounting income and DNI are equal. Explain the tax treatment for the 2016 ca...

Q: Refer to Problem C:14-42. How would your

Refer to Problem C:14-42. How would your answer change if instead the trust were a complex trust that makes no distributions in 2016 and 2017? Assume the trust earns $8,000 of corporate bond interest...

Q: Your manager advises you that Sam Skinner, a long-time

Your manager advises you that Sam Skinner, a long-time client, died on February 13 of the current year, survived by his wife Sue Skinner and several adult children. The Skinners are residents of a non...

Q: On which of the following issues will the IRS likely issue a

On which of the following issues will the IRS likely issue a private letter ruling and why? In your answer, assume that no other IRS pronouncement addresses the issue and that pertinent Treasury Regul...

Q: Kaiwan, Inc., a calendar year S corporation, is partly

Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $32,000. During the year, Sharrod’s share of a Kaiwan long-term capital gain (LTCG) is $5,000, a...

Q: Carla was the owner of vacant land that she was holding for

Carla was the owner of vacant land that she was holding for investment. She paid $2 million for the land in 2013. Raymond was an investor in vacant land. He thought Carla’s land might be the site of a...

Q: Amy and Mitchell are equal partners in the accrual basis AM Partnership

Amy and Mitchell are equal partners in the accrual basis AM Partnership. At the beginning of the current tax year, Amy’s capital account has a balance of $300,000, and the partnership has recourse deb...

Q: Suzy contributed assets valued at $360,000 (basis of

Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz- Anna GP (a general partnership). Anna contributed land and a building valued at $640,000 (basis...

Q: Continue with the facts presented in Problem 30, except that Suz

Continue with the facts presented in Problem 30, except that Suz-Anna was formed as an LLC instead of a general partnership. a. How would Suz-Anna’s ending liabilities be treated? b. How would Suzy’s...

Q: Janice is the sole owner of Catbird Company. In the current

Janice is the sole owner of Catbird Company. In the current year, Catbird had operating income of $100,000, a long-term capital gain of $15,000, and a charitable contribution of $5,000. Janice withdre...

Q: Ellie and Linda are equal owners in Otter Enterprises, a calendar

Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition...

Q: Included in Alice’s regular taxable income and in her AMT base is

Included in Alice’s regular taxable income and in her AMT base is a $300,000 capital gain on the sale of stock she owned for three years. Alice is in the 35% tax bracket for regular income tax purpose...

Q: Mary is a shareholder in CarrollCo, a calendar year S corporation

Mary is a shareholder in CarrollCo, a calendar year S corporation. At the be- ginning of the year, her stock basis is $10,000, her share of the AAA is $2,000, and her share of corporate AEP is $6,000....

Q: Maul, Inc., a calendar year S corporation, incurred the

Maul, Inc., a calendar year S corporation, incurred the following items. Tax-exempt interest income ……………………………………. $ 7,000 Sales ……………………………………………………………………. 140,000 Depreciation recapture income ………...

Q: Zebra, Inc., a calendar year S corporation, incurred the

Zebra, Inc., a calendar year S corporation, incurred the following items this year. Sammy is a 40% Zebra shareholder throughout the year. Operating income …………………………………………………$100,000 Cost of goods so...

Q: Valence Corporation’s Form 1120S shows ordinary income of $88,000

Valence Corporation’s Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate recor...

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Lefty completes the following capital asset transactions. Compute Lefty’s recognized capital gain or loss from these transactions. Long-term gain………. $10,000 Short-term gain………. 4,000 Short-term loss...

Q: Coline has the following capital gain and loss transactions for 2015

Coline has the following capital gain and loss transactions for 2015. Short-term capital gain $ 5,000 Short-term capital loss (2,100) Long-term capital gain (28%) 6,000 Long-term capital gain (15%)...

Q: Elliott has the following capital gain and loss transactions for 2015.

Elliott has the following capital gain and loss transactions for 2015. Short-term capital gain $ 1,500 Short-term capital loss (3,600) Long-term capital gain (28%) 12,000 Long-term capital gain (2...

Q: Compute the taxable income for 2015 for Emily on the basis of

Compute the taxable income for 2015 for Emily on the basis of the following information. Her filing status is single. Salary ………………………………………………………………….………………………….……………$85,000 Interest income from bon...

Q: In 2015, Kathleen Tweardy incurs $30,000 of interest

In 2015, Kathleen Tweardy incurs $30,000 of interest expense related to her investments. Her investment income includes $7,500 of interest, $6,000 of qualified dividends, and a $12,000 net capital gai...

Q: Helen borrowed $150,000 to acquire a parcel of land

Helen borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During 2015, she paid interest of $12,000 on the loan. She had AGI of $90,000 for the year. Other items related...

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Q: Elaine Case (single with no dependents) has the following transactions

Elaine Case (single with no dependents) has the following transactions in 2015: AGI (exclusive of capital gains and losses) $240,000 Long-term capital gain …………………… 22,000 Long-term capital loss ………...

Q: Platinum, Inc., has determined its taxable income as $215

Platinum, Inc., has determined its taxable income as $215,000 before considering the results of its capital gain or loss transactions. Platinum has a short- term capital loss of $24,000, a long-term c...

Q: The taxpayer is an antiques collector and is going to sell an

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Q: In 2015, Bertha Jarow (head of household with three dependents

In 2015, Bertha Jarow (head of household with three dependents) had a $28,000 loss from the sale of a personal residence. She also purchased from an individual inventor for $7,000 (and resold in two m...

Q: Assume in Problem 34 that Julio has a capital loss carryover of

Assume in Problem 34 that Julio has a capital loss carryover of $50,000 in the current tax year. Julio has no other capital gain transactions during the year. What amount of the capital loss may Julio...

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How is capital gain income treated differently from other forms of income?

Q: Claudio owns a passive activity that has a basis of $28

Claudio owns a passive activity that has a basis of $28,000 and a fair market value of $38,000. The activity has suspended losses of $16,000. To reduce their estate, every year Claudio and his wife g...

Q: Newcastle Corporation was incorporated in 2016. For the years 2016 through

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Q: Faith, who is single, sells the following assets during 2017

Faith, who is single, sells the following assets during 2017: • 20,000 shares of qualified small business stock at a loss of $62,000. Faith bought the stock in 2012. • 1,200 shares of Geelong Industri...

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Explain how the deduction allowed for a charitable contribution of ordinary income property is different from the deduction for the donation of long-term capital gain property.

Q: During the current year, Inge sells stock purchased three years ago

During the current year, Inge sells stock purchased three years ago at a loss of $9,000. She also owns a 10% interest in Chatham, Inc., which is organized as an S corporation. Chatham reports ordina...

Q: Marjorie is single and has the following investment income:

Marjorie is single and has the following investment income: Interest on savings…………………………………$2,900 Municipal bond interest…………………………….1,500 Dividends………………………………………………..7,600 She pays investment int...

Q: Jana gives property worth $54,000 to her alma mater

Jana gives property worth $54,000 to her alma mater during the current year. She purchased the property several years ago for $32,000. a. What is Jana's maximum deduction if the property is ordinary...

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Miguel is a successful businessman who has been approached by St. Kilda University to make a donation to its capital campaign. He agrees to contribute $75,000, but he is unsure which of the following...

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What is capital gain income? How is it different from ordinary income?

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What basic tax-planning strategy should a taxpayer with a large net capital gain for the year pursue before the end of the year?

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Claude is a CPA and a partner with SKH and Associates, a regional public accounting firm. In September 2015, Brokaw Technologies approached one of his clients, Walter Fenner, about acquiring 100 acre...

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Ken and Helen own a bed and breakfast in Vermont. They acquired the property in 2002 for $190,000, and their adjusted basis in it is $95,000. The property is worth $260,000, and they have a mortgage...

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Marnie buys 500 shares of qualified small business stock in H.R. Pizza, Inc., on September 10, 2008 for $20,000. She sells the 500 shares for $120,000 on October 2, 2017. Marnie's other capital asse...

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Q: At the beginning of 2017, Heather owns the following stocks:

At the beginning of 2017, Heather owns the following stocks: In addition to these stocks, Heather received 400 shares of Poor Boy preferred stock from her grandfather as a gift on December 25, 2016....

Q: Amal received a Form 1099-DIV with a capital gain distribution

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Q: Francisco, a single taxpayer, has income from his W-

Francisco, a single taxpayer, has income from his W-2 of $93,250. He also has a short-term capital loss of $7,311 a short-term capital gain of $2,100, and a long-term capital gain of $4,680. What is...

Q: In 2005, Duncan purchased 2,000 shares of stock for

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Q: What is a capital gain distribution, and how is it taxed

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Distinguish between the tax treatment for donations to charitable organizations of cash, ordinary income property, and capital gain property.

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Q: Assume that one year ago, you bought 120 shares of a

Assume that one year ago, you bought 120 shares of a mutual fund for $33 a share, you received a $0.60 per-share capital gain distribution during the past 12 months, and the market value of the fund i...

Q: Three years ago, James Matheson bought 200 shares of a mutual

Three years ago, James Matheson bought 200 shares of a mutual fund for $23 a share. During the three-year period, he received total income dividends of $0.92 per share. He also received total capita...

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In the table below indicate how each of the key terms affects a mutual fund investment and how each would be taxed.

Q: During 2017, Raymond, a single individual, earned a salary

During 2017, Raymond, a single individual, earned a salary of $196,000. He also had the following items of investment income: $40,000 net short-term capital gain on sale of stock, $7,000 dividend inco...

Q: Jennifer and Jason Greco are married and file a joint tax return

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Marco and Lisa are married and file a joint tax return. Lisa has salary income of $260,000 and Marco has salary income of $400,000. They also have the following items of investment income: $60,000 net...

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Q: A single taxpayer has $15,000 of ordinary taxable income

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Q: Al Shalou, a single individual, had only $14,

Al Shalou, a single individual, had only $14,000 of salary income in 2017, but he had a number of taxable gains and losses on his property transactions during the year with the following results: a....

Q: Bill had the following gains and losses on asset sales: $

Bill had the following gains and losses on asset sales: $500 gain on stock held 11 months; a $2,300 gain on land held two years; $1,900 loss on gold coins held two years; $1,200 gain on antique toys h...

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Q: In the current year, Serena sold investment land for $105

In the current year, Serena sold investment land for $105,000 that she purchased six years ago for $61,000; a diamond engagement ring for $1,800 that her ex-fiancée had given her nine months ago (purc...

Q: Sharon has salary income of $68,000, a net

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Q: Chester provides you with the following income information for years 1 through

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Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long term or short term. a. 100 shares of Bilco stock bought for $8,000 on...

Q: Glen transferred corporate stock worth $300,000 with a tax

Glen transferred corporate stock worth $300,000 with a tax basis of $160,000 to an irrevocable trust. No gift taxes are paid. The terms of the trust require the independent trustee to distribute the t...

Q: Whitlaw Corporation has $150,000 of gross profit on sales

Whitlaw Corporation has $150,000 of gross profit on sales, operating expenses of $60,000 (excluding cost recovery), $4,000 dividend income from a one-percent-owned corporation, a $10,000 capital gain...

Q: Stacey became an employee of DotGismo, Inc., a privately held

Stacey became an employee of DotGismo, Inc., a privately held firm. On December 15, 20X3, Stacey was allowed to buy 20,000 shares of DotGismo stock for $40,000 dollars. At that time when Stacey bough...

Q: Suppose Alex earned $500 (nominal capital gain) from selling

Suppose Alex earned $500 (nominal capital gain) from selling stock he bought ten years ago. During the last ten years, prices increased significantly, which means that Alex’s real capital gain is only...

Q: Susan Lussier is 35 years old and employed as a tax accountant

Susan Lussier is 35 years old and employed as a tax accountant for a major oil and gas exploration company. She earns nearly $135,000 a year from her salary and from participation in the companyâ...

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Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income and capital appreciation. Rather than acquire m...

Q: Assuming you purchased a share of stock for $50 one year

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Q: Assume you purchased a bond for $9,500. The

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Q: John Reardon purchased 100 shares of Tomco Corporation in December 2016 at

John Reardon purchased 100 shares of Tomco Corporation in December 2016 at a total cost of $1,762. He held the shares for 15 months and then sold them, netting $2,500. During the period he held the st...

Q: An investor purchases a mutual fund for $50. The fund

An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $52.50. What is the ne...

Q: An investor purchases a mutual fund share for $100. The

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Q: You purchased 1,000 shares of Koogal stock five years ago

You purchased 1,000 shares of Koogal stock five years ago for $30 per share. Today Koogal is repurchasing your shares through a fixed-price tender offer for $80 per share. What are the after-tax proce...

Q: Sally and Charles Heck received the following dividends and interest during 2016

Sally and Charles Heck received the following dividends and interest during 2016:  Assuming the Hecks file a joint tax return, complete Schedule B of Form 1040 (on Page 2-35) for them f...

Q: Charu Khanna received a Form 1099-B showing the following stock

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Q: Steve Drake sells a rental house on January 1, 2016,

Steve Drake sells a rental house on January 1, 2016, and receives $120,000 cash and a note for $45,000 at 10 percent interest. The purchaser also assumes the mortgage on the property of $35,000. Steve...

Q: Sally hires a maid to work in her home for $260

Sally hires a maid to work in her home for $260 per month. The maid is 25 years old and not related to Sally. During 2016, the maid worked 10 months for Sally. a. What is the amount of Social Security...

Q: For its current tax year, Ilex Corporation has ordinary income of

For its current tax year, Ilex Corporation has ordinary income of $240,000, a short-term capital loss of $60,000, and a long-term capital gain of $20,000. Calculate Ilex Corporation’s tax liability fo...

Q: 1. All of the following assets are capital assets, except

1. All of the following assets are capital assets, except: a. A personal automobile b. IBM stock c. A child’s bicycle d. Personal furniture e. Used car inventory held by a car dealer 2. Which of the...

Q: 1. In 2016, Mary sells for $14,000

1. In 2016, Mary sells for $14,000 a machine used in her business. The property was purchased on May 1, 2014, at a cost of $13,000. Mary has claimed depreciation on the machine of $8,000. What is the...

Q: The Benjamin family had wage earnings of $185,000 in

The Benjamin family had wage earnings of $185,000 in 2015. They received interest of $4,500 on corporate bonds and $1,500 on bonds issued by the state. Their dividend income was $500, and they had a...

Q: Jessica Varcoe works as a drug manufacturer’s representative based in Irvine,

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Q: A year ago, George Jetson, from Orbit City, Texas

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Q: Zeno Inc. sold two capital assets in 2018. The first

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Q: Lemon Corporation generated $324,600 of income from ordinary business

Lemon Corporation generated $324,600 of income from ordinary business operations. It also sold several assets during the year. Compute Lemon’s taxable income under each of the following alternative as...

Q: Ms. D sold a business that she had operated as a

Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets. The purchaser paid a lump-sum price of $30...

Q: Twelve years ago, Mr. and Mrs. Chang purchased a

Twelve years ago, Mr. and Mrs. Chang purchased a business. This year, they sold the business for $750,000. On date of sale, the business balance sheet showed the following assets. The sales contract...

Q: Jayanthi and Krish each own a 50 percent general partner interest in

Jayanthi and Krish each own a 50 percent general partner interest in the JK Partnership. The following information is available regarding the partnership’s 2017 activities. Sales revenue ………………………………...

Q: Refer to the facts in the preceding problem. a.

Refer to the facts in the preceding problem. a. Complete Schedule K, Form 1065, for the partnership. b. Complete Schedule K-1, Form 1065, for Jayanthi. Data from Problem 19: Jayanthi and Krish each...

Q: Corporation P owns 93 percent of the outstanding stock of Corporation T

Corporation P owns 93 percent of the outstanding stock of Corporation T. This year, the corporation’s records provide the following information. a. Compute each corporationâ&...

Q: Jaclyn Biggs, who files as a head of household, never

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Q: Mr. Lay, who has a 37 percent marginal tax rate

Mr. Lay, who has a 37 percent marginal tax rate on ordinary income, earned a $22,030 dividend on his investment in Rexford Mutual Fund. Compute the income tax and the Medicare contribution tax on this...

Q: Mr. Alm earned a $61,850 salary and recognized

Mr. Alm earned a $61,850 salary and recognized a $5,600 capital loss on the sale of corporate stock this year. Compute Mr. Alm’s AGI and any capital loss carry forward into future years in each of the...

Q: This year, Linda Moore earned a $112,000 salary

This year, Linda Moore earned a $112,000 salary and $2,200 interest income from a jumbo certificate of deposit. She recognized a $15,300 capital loss on the sale of undeveloped land. Compute Linda’s A...

Q: Mrs. Cox, a head of household, earned a $

Mrs. Cox, a head of household, earned a $313,000 salary and recognized a $29,300 net long-term capital gain this year. Compute the income tax on the gain if: a. None of the gain is collectibles gain o...

Q: Diane Stacy, who has a 32 percent marginal tax rate on

Diane Stacy, who has a 32 percent marginal tax rate on ordinary income and a 3.8 percent Medicare contribution tax rate on investment income, owns 13,800 shares in Tobler Mutual Fund. This year, she r...

Q: Mr. Dunn, who has a 32 percent marginal tax rate

Mr. Dunn, who has a 32 percent marginal tax rate on ordinary income, recognized a $15,000 capital loss in 2018. Compute the tax savings from this loss assuming that: a. He also recognized an $18,000 s...

Q: In 2000, Ms. Ennis, a head of household,

In 2000, Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Seta stock. Seta is a qualified small business. This year, Ms. Ennis sold all 500 shares for $117,400. Her on...

Q: In 2005, Mr. Earl, a single taxpayer, contributed

In 2005, Mr. Earl, a single taxpayer, contributed $45,000 in exchange for 500 shares of DB stock. In 2008, he paid $40,000 to another shareholder to purchase 1,000 more DB shares. All DB’s stock quali...

Q: Mr. and Mrs. Poe earned $115,900 compensation

Mr. and Mrs. Poe earned $115,900 compensation income and $963 interest this year and recognized a $600 short-term capital gain and a $7,200 long-term capital gain on the sale of securities. They incur...

Q: Mr. Erwin’s marginal tax rate on ordinary income is 37 percent

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One of your clients is planning to sell a piece of raw land and expects to incur a substantial gain on the sale. He has asked you to determine whether this gain will be considered capital gain or ordi...

Q: Four years ago, Amy Huang contributed four acres of undeveloped land

Four years ago, Amy Huang contributed four acres of undeveloped land to Richter Company in exchange for a 12 percent equity interest in Richter. Amy’s tax basis in the land was $275,000, and the land’...

Q: Mrs. Evelyn Baker sued her stockbroker for mismanagement of her account

Mrs. Evelyn Baker sued her stockbroker for mismanagement of her account. The broker ultimately settled the case by paying her $250,000. The payment represented the loss in value of Mrs. Baker’s stock...

Q: Mr. A, who has a 35 percent marginal tax rate

Mr. A, who has a 35 percent marginal tax rate, must decide between two investment opportunities, both of which require a $50,000 initial cash outlay in year 0. Investment 1 will yield $8,000 before-ta...

Q: For its first four years of operation, Corporation Y reported the

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Q: Olno Inc. has a $52,100 capital loss carryforward

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Q: Firm K, a non corporate taxpayer, has owned investment land

Firm K, a non corporate taxpayer, has owned investment land with a $600,000 basis for four years. Two unrelated parties want to acquire the land from K. Party A has offered $770,000 cash, and Party B...

Q: As of November 30, Ms. Brett had $12,

As of November 30, Ms. Brett had $12,000 capital losses and no capital gains. She owns 4,900 shares of GG stock with a $15 basis and a $45 FMV per share. Ms. Brett plans to hold her stock for three mo...

Q: At the beginning of the year, Mr. L put $

At the beginning of the year, Mr. L put $50,000 cash into Investment X. At the end of the year, he received a check for $2,800, representing his annual return on the investment. Mr. L’s marginal tax r...

Q: Ms. Ellis, a single individual, had $115,

Ms. Ellis, a single individual, had $115,000 taxable income. Compute her income tax assuming that: a. Taxable income includes no capital gain. b. Taxable income includes $22,000 capital gain eligible...

Q: Mrs. Beard recognized a $12,290 capital loss on

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Q: This year, Firm B recognized a $100,000 capital

This year, Firm B recognized a $100,000 capital gain on the sale of investment land. Toward the end of the year, the firm plans to sell stock from its investment portfolio to generate a $100,000 capit...

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Using an electronic research database such as Checkpoint, CCH Intelli Connect, or LexisNexis, do a keyword search that includes both the phrase capital gain and the keyword livestock. Include both pri...

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Q: Ms. Imo, who is single, purchased her first home

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Q: Mr. and Mrs. Kilo purchased their first home in 2003

Mr. and Mrs. Kilo purchased their first home in 2003 for $240,000. They sold this home in 2007 for $210,000. They purchased their second home in 2008 for $435,000 and sold it this year for $1,150,000....

Q: Tom and Allie Benson (ages 53 and 46) are residents

Tom and Allie Benson (ages 53 and 46) are residents of Fort Worth, Texas, and file a joint federal income tax return. They provide the entire support for their three children, ages 19, 18, and 14. On...

Q: Five years ago, Tom Mohy bought 10,000 shares of

Five years ago, Tom Mohy bought 10,000 shares of stock at $10 per share in a pharmaceutical company. Today, the stock is worth $200,000 and is paying a dividend of $8,000 per year. Tom feels that the...

Q: Jeremy earned $100,000 in salary and $6,

Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy’s employer withheld $11,200 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qual...

Q: During 2018, your clients, Mr. and Mrs. Howell

During 2018, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets Date Acquired Purchase Price Broker’s Commission Paid at Time of Purchase  300 shares of...

Q: Dahlia is in the 32 percent tax rate bracket and has purchased

Dahlia is in the 32 percent tax rate bracket and has purchased the following shares of Microsoft common stock over the years: Microsoft common stock  Date Purchased Shares Basis  7/10/2008 400...

Q: Grayson is in the 24 percent tax rate bracket and has the

Grayson is in the 24 percent tax rate bracket and has the sold the following stocks in 2018: Date Purchased Basis Date Sold Amount Realized  Stock A 1/23/1994 $7,250 7/22/2018 $4,500  St...

Q: Shaun bought 300 shares of Dental Equipment, Inc. several years

Shaun bought 300 shares of Dental Equipment, Inc. several years ago for $10,000. Currently the stock is worth $8,000. Shaun’s marginal tax rate this year is 24 percent, and he has no other capital gai...

Q: On January 1 of year 1, Nick and Rachel Sutton purchased

On January 1 of year 1, Nick and Rachel Sutton purchased a parcel of undeveloped land as an investment. The purchase price of the land was $150,000. They paid for the property by making a down payment...

Q: Henrich is a single taxpayer. In 2018, his taxable income

Henrich is a single taxpayer. In 2018, his taxable income is $450,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? a. All of his inco...

Q: Omar ’s business purchased several pieces of machinery some time ago for

Omar ’s business purchased several pieces of machinery some time ago for $25,000. At the beginning of the current year, this pool of assets had a UCC of $15,000. During the year, Omar decided to sell...

Q: 1. Park Recreational Vehicles Ltd. shares are currently selling for

1. Park Recreational Vehicles Ltd. shares are currently selling for $37.50 each. You bought 200 shares one year ago at $34 and received dividend payments of $1.50 per share. What was your total dollar...

Q: 1. Which of the following statements is false? a

1. Which of the following statements is false? a. A spot price is a price today for immediate delivery. b. If a Canadian firm has to pay U.S. dollars in the future, it worries about the potential depr...

Q: 1. Calculate the capital gain return for a stock that was

1. Calculate the capital gain return for a stock that was purchased at $32 one year ago and is now worth $34. It paid four quarterly dividends of $1.50 per share each throughout the year. a. 9.75 perc...

Q: Paladin, Inc. reported taxable income of $1,000

Paladin, Inc. reported taxable income of $1,000,000 this year and paid federal income taxes of 210,000. The company reported a capital gain from sale of investments of $150,000, which was partially of...

Q: Tiny and Tim each own half of the 100 outstanding shares of

Tiny and Tim each own half of the 100 outstanding shares of Flower Corporation. This year Flower reported taxable income of $6,000. In addition, Flower received $20,000 of life insurance proceeds due...

Q: Fizbo Corporation is in the business of breeding and racing horses.

Fizbo Corporation is in the business of breeding and racing horses. Fizbo has taxable income of $5,000,000 other than from these transactions. It has nonrecaptured §1231 losses of $10,000 from 2014 an...

Q: A 10-year, 12% semiannual coupon bond with a

A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume that the bond has just been issued.) a. What is...

Q: J\1ario, a single taxpayer with two dependent children,

J\1ario, a single taxpayer with two dependent children, has the following items of income and expense during 2018: a. Determine Mario's taxable income for 2018. b. Determine Mario's NOL for 2018....

Q: Carla was the owner of vacant land that she was holding for

Carla was the owner of vacant land that she was holding for investment. She paid $2 million for the land in 2016. Raymond was an investor in vacant land. He thought Carla's land might be the site of a...

Q: Elaine Case (single with no dependents) has the following transactions

Elaine Case (single with no dependents) has the following transactions in 2018: What is Elaine's net capital gain or loss' Draft a letter to Elaine describing how the net capital gain or loss will b...

Q: In 2018, Bertha Jarow had a $28,000 loss

In 2018, Bertha Jarow had a $28,000 loss from the sale of a personal residence. She also purchased from an individual inventor for $7,000 (and resold in two montl1s for $18,000) a patent on a rubber b...

Q: Con1pute the taxable income for 2018 for Emily on the basis of

Con1pute the taxable income for 2018 for Emily on the basis of the following information. Her filing status is single.

Q: In 2018, Kathleen Tweardy incurs $30,000 of interest

In 2018, Kathleen Tweardy incurs $30,000 of interest expense related to her investments. Her investment income includes $7,500 of interest, $6,000 of qualified dividends, and a $12,000 net capital gai...

Q: Assume in Problem 34 that Julio takes a capital loss carryover of

Assume in Problem 34 that Julio takes a capital loss carryover of $50,000 Decision Making into the current tax year. Julio records no other capital gain transactions during the year. What amount of th...

Q: Valence Corporation's Form 11205 shows ordinary income of $88,000

Valence Corporation's Form 11205 shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate recor...

Q: Celine has the following capital gain and loss transactions for 2018.

Celine has the following capital gain and loss transactions for 2018. After the capital gain and loss netting process, what is the amount and character of Celine's gain or loss?

Q: Elliott has the following capital gain and loss transactions for 2018.

Elliott has the following capital gain and loss transactions for 2018. After the capital gain and loss netting process, what is the amount and character of Elliott's gain or loss?

Q: Included in Alice's regular taxable income and in her AMT base is

Included in Alice's regular taxable income and in her AMT base is a $300,000 capital gain on the sale of stock she owned for three years. Alice is in the 20% tax bracket for net capital gains for regu...

Q: Kelsey Drums Inc. is a well-established sup- plier

Kelsey Drums Inc. is a well-established sup- plier of fine percussion instruments to orchestras all over the United States. The company’s class A common stock has paid a dividend of $2.80 per share pe...

Q: For its current tax year, Ilex Corporation has ordinary income of

For its current tax year, Ilex Corporation has ordinary income of $260,000, a short-term capital loss of $60,000, and a long-term capital gain of $20,000. Calculate Ilex Corporation’s tax liability fo...

Q: Beverly and Ken Hair have been married for 3 years. Beverly

Beverly and Ken Hair have been married for 3 years. Beverly works as an accountant at Cypress Corporation. Ken is a full-time student at Southwest Missouri State University (SMSU) and also works part-...

Q: Carl Conch and Mary Duval are married and file a joint return

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...

Q: Skylar and Walter Black have been married for 25 years. They

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 So...

Q: The above amounts do not reflect any allocation between rental and personal

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...

Q: Lisa Kohl (age 44) is an unmarried high school principal

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&ac...

Q: Sally and Charles Heck received the following Form 1099-DIV in

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 join...

Q: Charu Khanna received a Form 1099-B showing the following stock

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. Calc...

Q: Dick owns a house that he rents to college students. Dick

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...

Q: Rob operates a small plumbing supplies business as a sole proprietor.

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 $5...

Q: Austin purchased shares of stock for x dollars in 2015. He

Austin purchased shares of stock for x dollars in 2015. He sold them years later for y dollars per share. a. Express his capital gain algebraically. b. Express his capital gain as a percent of the p...

Q: Zeke bought g shares of stock for w dollars per share.

Zeke bought g shares of stock for w dollars per share. His broker called him and told him to sell the shares when they earn a 40% capital gain. a. Express the total purchase price of all the shares a...

Q: Jake bought d shares of stock for x dollars per share years

Jake bought d shares of stock for x dollars per share years ago. His stock rose in price and eventually hit a price that would earn him a 140% capital gain. He decided to sell half of his d shares. a...

Q: Mitchell bought 600 shares of Centerco 2 years ago for $34

Mitchell bought 600 shares of Centerco 2 years ago for $34.50 per share. He sold them yesterday for $38.64 per share. a. What was the percent increase in the price per share? Round to the nearesttent...

Q: Tori bought x shares of Mattel stock for m dollars per share

Tori bought x shares of Mattel stock for m dollars per share. She sold all of the shares months later for y dollars per share. Express her capital gain or loss algebraically.

Q: Maria purchased 1,000 shares of stock for $35.

Maria purchased 1,000 shares of stock for $35.50 per share in 2014. She sold them in 2016 for $55.10 per share. Express her capital gain as a percent, rounded to the nearest tenth of a percent.

Q: Maribel purchased 2,000 shares of stock for $25.

Maribel purchased 2,000 shares of stock for $25.43 per share. She sold them for $44.10 per share. Express her capital gain to the nearest tenth of a percent.

Q: A local hairstylist bought 450 shares of a cosmetics corporation for $

A local hairstylist bought 450 shares of a cosmetics corporation for $33.50 per share. He sold the shares for $39.01 per share. a. What was the percent increase in the price per share? Round to the n...

Q: Laura bought 55 shares of stock for $3.50 per

Laura bought 55 shares of stock for $3.50 per share last year. She paid her broker a 1% commission. She sold the stock this week for $2 per share, and paid her broker a $10 flat fee. a. What were Lau...

Q: Anle Corporation has a current price of $20, is expected

Anle Corporation has a current price of $20, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $22. a. What is Anle’s expected dividend yield?...

Q: Repeat Problem 4 assuming that the stock fell $5 to $

Repeat Problem 4 assuming that the stock fell $5 to $45 instead. a. Is your capital gain different? Why or why not? b. Is your dividend yield different? Why or why not? Data from Problem 4: You boug...

Q: Justin Stone was an employee of DataCare Services, Inc. His

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 d...

Q: Which of the following would be considered a tax benefit or advantage

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 contributi...

Q: During the year, Brandi had the following transactions: a long

During the year, Brandi had the following transactions: a long term capital gain from the sale of land, a short-term capital l0ss from the sale of stock, and a l0ng-term capital gain from the sale of...

Q: Thelma inherited land from Sadie on June 7, 2018. The

Thelma inherited land from Sadie on June 7, 2018. The land appreciated in value by 100% during the six months it was owned by Sadie. The value has remained stable during the three months Thelma has ow...

Q: During 2018, Rick and his wife, Sara had the following

During 2018, Rick and his wife, Sara had the following items of income and expense to report: a. Assuming that Rick and Sara file a joint return, what is their taxable income for 2018? b. What is th...

Q: Nell, single and age 38, had the following income and

Nell, single and age 38, had the following income and expense items in 2018: Determine Nell's AGI for 2018.

Q: Assume that in addition to the information in Problem 49, Nell

Assume that in addition to the information in Problem 49, Nell had the following items in 2018: The casualty gains and losses are net of the $100-per-event floor. Determine Nell's AGI for 2018. Dat...

Q: Assume that in addition to the information in Problems 49 and 50

Assume that in addition to the information in Problems 49 and 50, Nell had the following items in 2018: The casualty loss is net of the $100-per-event floor. Determine Nell's taxable income and NOL...

Q: Asok’s AGI for 2018 is $133,050. Included in

Asok’s AGI for 2018 is $133,050. Included in this AGI is a $45,000 25% long term capital gain and a $13,000 0%/15%/20% long term capital gain. Asok is sing1e and uses the standard deduction. Compute h...

Q: Sasha and Tara are married, filing jointly. Their correctly determined

Sasha and Tara are married, filing jointly. Their correctly determined 2018 taxable income is $127,000. This taxable income includes a $5,000 1231 gain from the sa1e of business land that was included...

Q: Ted purchased equipment and used materials to develop a patent. The

Ted purchased equipment and used materials to develop a patent. The development costs were deducted on prior returns. The bases and fair market values of the assets are presented below. Sarah has ma...

Q: On February 20, 2013, Tom (an executive of Hawk

On February 20, 2013, Tom (an executive of Hawk Corporation; a calendar year corporation) purchased 100 shares of Hawk stock (selling at $20 a share) for $10. A condition of the transaction was that T...

Q: Rosa exercises ISOs for 100 shares of Copper Corporation common stock at

Rosa exercises ISOs for 100 shares of Copper Corporation common stock at the option price of $100 per share on May 21, 2018, when the fair market value is $120 per share. She sells the 100 shares of c...

Q: Using the legend provided below, classify each statement under 2018 tax

Using the legend provided below, classify each statement under 2018 tax law a. A foreign tax credit is available. b. The deduction of charitable contributions is subject to percentage limitation(s)....

Q: Garnet has the following capital asset transactions during 2018:

Garnet has the following capital asset transactions during 2018: Further, Garnet has an excess capital loss carryforward of $6,000 from 2017. a. What are the tax consequences of these transactions i...

Q: Citron, a calendar year taxpayer, began business in January 2017

Citron, a calendar year taxpayer, began business in January 2017. It had a long-term capital gain of $5,000 in 2017 and a long-term capital loss of $10,000 in 2018. For both years, Citron had an opera...

Q: Harold, Marcia, and Richard are equal shareholders in Pelican Corporation

Harold, Marcia, and Richard are equal shareholders in Pelican Corporation, a calendar year C corporation. During the current year, Pelican makes a $150,000 distribution to its three shareho1ders. Of t...

Q: During the current year, Thrasher (a calendar year, accrual

During the current year, Thrasher (a calendar year, accrual basis S corporation) has the following transactions: a. Determine Thrasher Corporation's separately stated items for the current year. b....

Q: Jim Olsen owns all of the stock in Drake, a ca1endar

Jim Olsen owns all of the stock in Drake, a ca1endar year S corporation. For ca1endar year 2018, Drake anticipates an operating loss of $160,000 and cou1d, if deemed worthwhile, sell a stock investmen...

Q: Aiden has a 35% capital interest in the Oro Partnership and

Aiden has a 35% capital interest in the Oro Partnership and is entitled to a yearly guaranteed payment of $40，0∞00. As of January 1, 2018, Aiden's basis in the par...

Q: Using the IRS Tax Statistics that can be found at www.

Using the IRS Tax Statistics that can be found at www.irs.govjstatistics, based on adjusted gross income for the most recent year available, determine the amount of net long-term capital gain taxpayer...

Q: Zaire Corporation granted an ISO for 250 shares of its stock to

Zaire Corporation granted an ISO for 250 shares of its stock to Bruno on Ju1y 20, 2017, for service rendered. The option price was $130 and the fair market va1ue was $130 on the date of the grant. Bru...

Q: Green Corporation, a calendar year taxpayer, has ordinary income of

Green Corporation, a calendar year taxpayer, has ordinary income of $10,000 and a long-term capital loss of $12,000 in 2018. For past years, it had a long term capital gain of $2,500 in 2015 and a lon...

Q: Drab Corporation, a calendar year S Corporation, had the following

Drab Corporation, a calendar year S Corporation, had the following transactions during 2018: What is Drab's ordinary business income for 2018?

Q: During the year, Tamara had capital transactions resulting in gains (

During the year, Tamara had capital transactions resulting in gains (losses) as follows: Determine Tamara's net capital gain or loss as a result of these transactions.

Q: Ellie and Linda are equal owners in Otter Enterprises, a calendar

Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition...

Q: Torsten owns 100% of Taupe Corporation (a calendar year corporation

Torsten owns 100% of Taupe Corporation (a calendar year corporation), which had net operating income of $420,000 and long-term capital gain of $30,000 in the current year. Torsten has significant inco...

Q: Jonathan owns 100% of Lemon Company (a calendar year entity

Jonathan owns 100% of Lemon Company (a calendar year entity). In the current year, Lemon recognizes a long-term capital gain of $70,000 and no other income (or loss). Jonathan is in the 37% tax bracke...

Q: In the current year, Tanager Corporation (a calendar year C

In the current year, Tanager Corporation (a calendar year C corporation) had operating incon1e of $480,000 and operating expenses of $390,000. In addition, Tanager had a long-term capital gain of $55,...

Q: On December 31 of the current year, after receipt of his

On December 31 of the current year, after receipt of his share of partnership income, Fox sold his interest in a limited partnership for $50,000 cash plus relief of all liabilities. On that date, the...

Q: Krol Corp. distributed marketable securities in redemption of its stock in

Krol Corp. distributed marketable securities in redemption of its stock in a complete liquidation. On the date of distribution, these securities had a basis of $100,000 and a fair market value of $150...

Q: Wylie receives cash of $145,000 in liquidation of his

Wylie receives cash of $145,000 in liquidation of his partnership interest, in which he has a basis of $110,000. The partnership owns no hot assets and continues in existence. After following all of t...

Q: On December 31, Yong sells his 100/o interest in

On December 31, Yong sells his 100/o interest in Catatvissa LLC to Mei for $17,500. Yong is a calendar year taxpayer. Catawissa owns no hot assets, and its tax year ends on September 30. On October 1,...

Q: Your firm has a new individual client, Carla Navarro, who

Your firm has a new individual client, Carla Navarro, who has been assigned to you for preparation of the current year's tax return. Upon review, of Carla's tax returns from prior years, you notice th...

Q: In an after-tax replacement study between a defender and a

In an after-tax replacement study between a defender and a challenger, there may be a capital gain (CG) or loss (CL) when the defender is sold. (a) How is the gain or loss calculated, and (b) how does...

Q: A capital gain is calculated by the equation: (a

A capital gain is calculated by the equation: (a) Capital gain = book value – selling price (b) Capital gain = book value – first cost (c) Capital gain = market value – selling price (d) Capital gain...

Q: Taha is closely held by eight family members. Taha purchased investment

Taha is closely held by eight family members. Taha purchased investment land 12 years ago for $100,000. The land was recently appraised at an FMV of $3 million. A buyer has offered to pay cash for the...

Q: This year, Ms. Tan had a $29,000

This year, Ms. Tan had a $29,000 capital loss carryforward and an $8,200 suspended passive activity loss carryforward. She died on September 12 and didn’t recognize any capital gain or passive activit...

Q: Corporation AD operates four antique dealerships. Last year, it sold

Corporation AD operates four antique dealerships. Last year, it sold a 200-year-old desk to its sole shareholder, Mr. C, for $35,000. AD reported its $2,700 gain as ordinary income from the sale of in...

Q: For the following problems, assume the taxable year is 2019.

For the following problems, assume the taxable year is 2019. Jaclyn Biggs, who files as a head of household, never paid AMT before 2019. In 2019, her regular tax liability was $102,220 which included...

Q: Mr. Dunn, who has a 32 percent marginal rate on

Mr. Dunn, who has a 32 percent marginal rate on ordinary income and a 15 percent marginal rate on adjusted net capital gain, recognized a $15,000 capital loss in 2019. Compute the tax savings from thi...

Q: Tom and Allie Benson (ages 53 and 46) are residents

Tom and Allie Benson (ages 53 and 46) are residents of Fort Worth, Texas, and file a joint federal income tax return. They provide the entire support for their two children, ages 19 and 17. On the bas...

Q: Lola owns a 15 percent limited interest in AF Partnership, which

Lola owns a 15 percent limited interest in AF Partnership, which uses a calendar year for tax purposes. On April 12, Lola sold her entire interest to the R Corporation; consequently, she was a partner...

Q: Parker Company has earnings and profits of $8,000.

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 $10,0...

Q: In 2016 Grant purchased land for $103,000 for use

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. $...

Q: For each of the following cases, determine the amount of capital

For each of the following cases, determine the amount of capital gain or loss to report in each year (after taking into account any applicable carrybacks) and the capital loss carryforward to 2019, if...

Q: Haneen has taxable income of $115,000 without consideration of

Haneen has taxable income of $115,000 without consideration of capital gain or loss transactions. She has a short-term capital gain of $18,000, a long-term capital loss of $10,000, and a short-term ca...

Q: Respond to the following independent situations: a. Jacob is

Respond to the following independent situations: a. Jacob is a single taxpayer who has net investment income consisting of $10,000 interest on a certificate of deposit, $5,000 from dividends from a mu...

Q: Compute the taxable income for 2021 for Emily on the basis of

Compute the taxable income for 2021 for Emily on the basis of the following information. Her filing status is single. Salary………………………………………………………………………………$85,000 Interest income from bonds issued by X...

Q: How do U.S. individuals generate their income? Does

How do U.S. individuals generate their income? Does it vary by size of income (AGI)? Go to the IRS tax statistics website (irs.gov/statistics), and download a recent tax year’s information on “sources...

Q: Mario, a single taxpayer with two dependent children, has the

Mario, a single taxpayer with two dependent children, has the following items of income and expense during 2021: Gross receipts from business …………………………………………………………..$144,000 Business expenses …………………...

Q: During 2021, Rick and his wife, Sara, had the

During 2021, Rick and his wife, Sara, had the following items of income and expense to report: Gross receipts from business ……………………………………………………………..$400,000 Business expenses ………………………………………………………………...

Q: How do U.S. individuals generate their income? Does

How do U.S. individuals generate their income? Does it vary by size of income (AGI)? Go to the IRS tax statistics website (irs.gov/statistics), and download a recent tax year’s information on “sources...

Q: Thelma inherited land from Sadie on June 7, 2021. The

Thelma inherited land from Sadie on June 7, 2021. The land appreciated in value by 100% during the six months Sadie owned it. The value has remained stable during the three months Thelma has owned it,...

Q: In 2021, Kathleen Tweardy incurs $30,000 of interest

In 2021, Kathleen Tweardy incurs $30,000 of interest expense related to her investments. Her investment income includes $7,500 of interest, $6,000 of qualified dividends, and a $12,000 net capital gai...

Q: Liana Amiri (single with no dependents) has the following transactions

Liana Amiri (single with no dependents) has the following transactions in 2021: AGI (exclusive of capital gains and losses) ………………………………..$540,000 Long-term capital gain ……………………………………………………………….22,00...

Q: In 2021, Beth Jarow had a $28,000 loss

In 2021, Beth Jarow had a $28,000 loss from the sale of a personal residence. She also purchased a patent on a rubber bonding process from an individual inventor for $7,000 (and resold it in two month...

Q: Asok’s AGI for 2021 is $133,250. Included in

Asok’s AGI for 2021 is $133,250. Included in this AGI is a $45,000 25% longterm capital gain and a $13,000 0%/15%/20% long-term capital gain. Asok is single and uses the standard deduction. Compute hi...

Q: Sasha and Tara are married, filing jointly. Their correctly determined

Sasha and Tara are married, filing jointly. Their correctly determined 2021 taxable income is $127,000. This taxable income includes a $5,000 § 1231 gain from the sale of business land that was includ...

Q: Jamal purchased equipment and used materials to develop a patent. The

Jamal purchased equipment and used materials to develop a patent. The development costs were deducted on prior returns. The bases and fair market values of the assets are presented below. Sarah has ma...

Q: Rosa exercises ISOs for 100 shares of Copper Corporation common stock at

Rosa exercises ISOs for 100 shares of Copper Corporation common stock at the option price of $100 per share on May 21, 2021, when the fair market value is $120 per share. She sells the 100 shares of c...

Q: Garnet incurs the following capital asset transactions during the year.

Garnet incurs the following capital asset transactions during the year. Long-term capital gain ……………………………………………..$8,000 Short-term capital gain ……………………………………………….3,000 Further, Garnet has an excess...

Q: Citron, a calendar year taxpayer, began business in January 2020

Citron, a calendar year taxpayer, began business in January 2020. It had a long-term capital gain of $5,000 in 2020 and a long-term capital loss of $10,000 in 2021. For both years, Citron had an opera...

Q: Jim Oza owns all of the stock in Drake, a calendar

Jim Oza owns all of the stock in Drake, a calendar year S corporation. For calendar year 2021, Drake anticipates an operating loss of $160,000 and could, if deemed worthwhile, sell a stock investment...

Q: Aiden has a 35% capital interest in the Oro Partnership and

Aiden has a 35% capital interest in the Oro Partnership and is entitled to a yearly guaranteed payment of $40,000. As of January 1, 2021, Aiden’s basis in the partnership interest is $87,000. During t...

Q: Justin Stone was an employee of DataCare Services, Inc. His

Justin Stone was an employee of DataCare Services, Inc. His salary was $45,000 through November 10, 2020, when he was laid off. DataCare Services provided medical insurance for Justin and his family d...

Q: Glen and Diane Okumura (both age 48) are married,

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 Ok...

Q: Tom and Alice Honeycutt, ages 45 and 46, respectively,

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-...

Q: Enzo is a single taxpayer with the following gains and losses for

Enzo is a single taxpayer with the following gains and losses for 2021: • $2,100 short-term capital loss. • $24,000 long-term capital gain from sale of stock. • $14,000 § 1231 gain that is all unrecap...

Q: Using the legend provided below, classify each statement under 2021 tax

Using the legend provided below, classify each statement under 2021 tax law. a. A child care credit is available. b. The deduction of charitable contributions is subject to percentage limitation(s). c...

Q: Carla was the owner of vacant land that she was holding for

Carla was the owner of vacant land that she was holding for investment. She paid $2,000,000 for the land in 2018. Raymond was an investor in vacant land. He thought Carla’s land might be the site of a...

Q: Which of the following would be considered a tax benefit or advantage

Which of the following would be considered a tax benefit or advantage of a qualified retirement plan? a. Certain distributions may be subject to capital gain treatment. b. Employer contributions are d...

Q: Coline has the following capital gain and loss transactions for 2021:

Coline has the following capital gain and loss transactions for 2021: Short-term capital gain …………………………………..$ 5,000 Short-term capital loss …………………………………….(2,100) Long-term capital gain (28%) …………………...

Q: Elliott has the following capital gain and loss transactions for 2021:

Elliott has the following capital gain and loss transactions for 2021: Short-term capital gain …………………………………………$ 1,500 Short-term capital loss ………………………………………….(3,600) Long-term capital gain (28%) ………...

Q: Zaire Corporation granted an ISO for 250 shares of its stock to

Zaire Corporation granted an ISO for 250 shares of its stock to Bruno on July 20, 2020, for services rendered. The option price was $130 and the fair market value was $130 on the date of the grant. Br...

Q: Green Corporation, a calendar year taxpayer, has ordinary income of

Green Corporation, a calendar year taxpayer, has ordinary income of $10,000 and a long-term capital loss of $12,000 in 2021. Green incurred a long-term capital gain of $2,500 in 2018 and a long-term c...

Q: Abigail, Bobby, and Claudia are equal owners in Lafter,

Abigail, Bobby, and Claudia are equal owners in Lafter, an S corporation that was a C corporation several years ago. While Abigail and Bobby actively participate in running the company, Claudia has a...

Q: While James Craig and his former classmate Paul Dolittle both studied accounting

While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specialize...

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Beverly and Ken Hair have been married for 3 years. Beverly works as an accountant at Cypress Corporation. Ken is a full-time student at Southwest Missouri State University (SMSU) and also works part-...

Q: For its current tax year, Ilex Corporation has ordinary income of

For its current tax year, Ilex Corporation has ordinary income of $260,000, a short-term capital loss of $60,000, and a long-term capital gain of $20,000. Calculate Ilex Corporation’s tax liability fo...

Q: Sally and Charles Heck received the following Form 1099-DIV in

Sally and Charles Heck received the following Form 1099-DIV in 2019: The Hecks also received the following dividends and interest in 2019 (Forms 1099-DIV not shown): Assuming the Hecks file a joint ta...

Q: Skylar and Walter Black have been married for 25 years. They

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 stay-at-home parent and Walt is a high school teacher. Skylar&ac...

Q: Lisa Kohl (birthdate 02/14/1953) is an

Lisa Kohl (birthdate 02/14/1953) 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):...

Q: 3. Yasmeen purchases stock on January 30, 2018. If

3. Yasmeen purchases stock on January 30, 2018. If she wishes to achieve a long-term holding period, what is the first date that she can sell the stock as a long-term gain? a. January 20, 2019 b. Janu...

Q: Rob Wriggle operates a small plumbing supplies business as a sole proprietor

Rob Wriggle operates a small plumbing supplies business as a sole proprietor. In 2019, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages pa...

Q: Charu Khanna received a Form 1099-B showing the following stock

Charu Khanna received a Form 1099-B showing the following stock transactions and basis during 2019: None of the stock is qualified small business stock. The stock basis was reported to the IRS. Calcul...

Q: The Duo Growth Company just paid a dividend of $1 per

The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next three years and then to level off to 5% per year forever. You think...

Q: Capital Gains Tax. Joel (from problem 1) is in

Capital Gains Tax. Joel (from problem 1) is in the 22% tax bracket. What amount of taxes will he pay on his capital gain if he held the stock for less than a year?

Q: Tax Consequences. Rena purchased 200 shares of a no-load

Tax Consequences. Rena purchased 200 shares of a no-load stock mutual fund. During the year she received $3 per share in dividend distributions, $200 in long-term capital gain distributions, and capit...

Q: Tax Consequences. Ronnie owns 600 shares of a stock mutual fund

Tax Consequences. Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of sixty stock mutual fund shares ($40 per share) and long-term capital gain distributions...

Q: A bond has a par value of $1,000,

A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8% with interest paid annually. If the current market price is $800, what will be the percentage capital gain of...

Q: Long-term Treasury bonds currently are selling at yields to maturity

Long-term Treasury bonds currently are selling at yields to maturity of nearly 6%. You expect interest rates to fall. The rest of the market thinks that they will remain unchanged over the coming year...

Q: Three years ago, James Matheson bought 200 shares of a mutual

Three years ago, James Matheson bought 200 shares of a mutual fund for $29 a share. During the three-year period, he received total income dividends of $1.90 per share. He also received total capita...

Q: Assume that one year ago, you bought 120 shares of a

Assume that one year ago, you bought 120 shares of a mutual fund for $31 a share, you received a $0.82 per-share capital gain distribution during the past 12 months, and the market value of the fund i...

Q: Kelsey Drums Inc. is a well-established supplier of fine

Kelsey Drums Inc. is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company’s class A common stock has paid a dividend of $2.80 per share per...

Q: You have decided to open a margin account with your broker and

You have decided to open a margin account with your broker and to secure a margin loan. The initial margin requirement is 70%, and the maintenance margin is 30%. You have been following the price move...

Q: John Reardon purchased 100 shares of Tomco Corporation in December 2019 at

John Reardon purchased 100 shares of Tomco Corporation in December 2019 at a total cost of $1,762. He held the shares for 15 months and then sold them, netting $2,500. During the period he held the st...

Q: Karen Kline purchased 200 shares of Mex Inc. common stock for

Karen Kline purchased 200 shares of Mex Inc. common stock for $10 per share exactly two years ago, in December 2017. Today, December 15, 2019, the stock is selling for $18 per share. Because Karen str...

Q: Susan Lussier is 35 years old and employed as a tax accountant

Susan Lussier is 35 years old and employed as a tax accountant for a major oil and gas exploration company. She earns nearly $135,000 a year from her salary and from participation in the companyâ...

Q: Mary and Nick Stalcheck have an investment portfolio containing four investments.

Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income and capital appreciation. Rather than acquire m...

Q: Assume you purchased a share of stock in Verizon communications at the

Assume you purchased a share of stock in Verizon communications at the beginning of 2017 for $54.58. A year later the stock was worth $53.53, but during 2017 it paid a dividend of $2.32. Calculate the...

Q: Assume you purchased a bond for $9,700. The

Assume you purchased a bond for $9,700. The bond pays $100 interest every six months. You sell the bond after 18 months for $10,100. Calculate the following. a. Income b. Capital gain or loss c. Total...

Q: Arthur sat back in his chair and looked at the other accountants

Arthur sat back in his chair and looked at the other accountants who were working on their laptops. How had he gotten himself into this situation? It began last year when he was hired by Castor Gotlie...

Q: An investor accumulated 1800 shares of Microtel Corporation over a period of

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Q: Three years after the issue of a $10,000,

Three years after the issue of a $10,000, 6.5% coupon, 25-year bond, the rate of return required in the bond market on long-term bonds is 5.6% compounded semiannually. 1. At what price would the bond...

Q: Four and one-half years ago Gavin purchased a $25

Four and one-half years ago Gavin purchased a $25,000 bond in a new Province of Ontario issue with a 20-year maturity and a 6.1% coupon. If the prevailing market rate is now 7.1% compounded semiannual...

Q: Three years ago Quebec Hydro sold an issue of 20-year

Three years ago Quebec Hydro sold an issue of 20-year, 6.5% coupon bonds. Calculate an investor’s percent capital gain for the entire three-year holding period if the current semiannually compounded r...

Q: Two and one-half years ago the Province of Saskatchewan sold

Two and one-half years ago the Province of Saskatchewan sold an issue of 25-year, 6% coupon bonds. Calculate an investor’s percent capital gain for the entire 2 1 2 -year holding period if the current...

Q: A $10,000, 14% coupon, 25-

A $10,000, 14% coupon, 25-year bond issued on June 15, 2014, was purchased on March 20, 2017, to yield 9% to maturity, and then sold on April 20, 2020, to yield the purchaser 11.5% to maturity. What w...

Q: A $5000, 7% coupon, 20-year bond

A $5000, 7% coupon, 20-year bond issued on January 21, 2015, was purchased on January 25, 2016, to yield 6.5% to maturity, and then sold on January 13, 2017, to yield the purchaser 5.2% to maturity. W...

Q: Is it possible for the capital gain yield to exceed 100%?

Is it possible for the capital gain yield to exceed 100%? Explain or give an example.

Q: Under what circumstance can you realize a capital gain on a bond

Under what circumstance can you realize a capital gain on a bond investment?

Q: One year ago, Christos bought 1000 units of the Dominion Aggressive

One year ago, Christos bought 1000 units of the Dominion Aggressive Growth Fund at $20.35 per unit. Today a unit’s value is $19.10. During the year, the fund made a distribution of $0.40 per unit. On...

Q: Gabriel received $200 of income from an investment during the past

Gabriel received $200 of income from an investment during the past year. This represents an income yield of 4%. If the capital gain yield for the year was 10%, what was the value of the investment (no...

Q: Four years after the issue of a $10,000,

Four years after the issue of a $10,000, 9.5% coupon, 20-year bond, the rate of return required in the bond market on long-term bonds was 7.8% compounded semiannually. 1. At what price did the bond th...

Q: Four and one-half years ago, Glenda purchased 15 $

Four and one-half years ago, Glenda purchased 15 $1000 bonds in a Province of New Brunswick issue carrying an 8.5% coupon and priced to yield 9.8% (compounded semiannually). The bonds then had 18 year...

Q: Two and one-half years ago, Nova Scotia Power sold

Two and one-half years ago, Nova Scotia Power sold an issue of 25-year, 8% coupon bonds. If the current semiannually compounded return required in the bond market is 6.9%, calculate the percent capita...

Q: A $100 investment purchased one year ago is now worth $

A $100 investment purchased one year ago is now worth $110. It also earned $10 of income during the year. Determine the investment’s: 1. Income yield. 2. Capital gain yield. 3. Rate of total return....

Q: The market value of Stephanie’s bonds has declined from $1053.

The market value of Stephanie’s bonds has declined from $1053.25 to $1021.75 per bond during the past year. In the meantime she has received two semiannual interest payments of $35 per bond. Calculate...

Q: Vitaly’s shares of Offshore Petroleum have dropped in value from $36

Vitaly’s shares of Offshore Petroleum have dropped in value from $36.75 to $32.25 during the past year. The shares paid a $0.50 per share dividend six months ago. Calculate Vitaly’s income yield, capi...

Q: A $100 investment purchased one year ago is now worth $

A $100 investment purchased one year ago is now worth $90. It also generated $10 of income during the year. Determine the investment’s: 1. Income yield. 2. Capital gain yield. 3. Rate of total return....

Q: Shares purchased one year ago for $8790 are now worth $

Shares purchased one year ago for $8790 are now worth $15,390. During the year, the shares paid dividends totalling $280. Calculate the shares’: 1. Income yield. 2. Capital gain yield. 3. Rate of tota...

Q: One year ago, $13,000 was invested in units

One year ago, $13,000 was invested in units of a mutual fund. The units paid a distribution of $260 during the year, but the mutual fund units are now worth only $11,400. What has been the: 1. Income...

Q: Calculate the income yield, capital gain yield, and rate of

Calculate the income yield, capital gain yield, and rate of total return in 2018 for BCE Inc. shares and Mawer New Canada Fund units.

Q: Calculate the income yield, capital gain yield, and rate of

Calculate the income yield, capital gain yield, and rate of total return in each of 2017 and 2018 for TD Bank shares and Desjardins Dividend Growth Fund units.

Q: Calculate the income yield, capital gain yield, and rate of

Calculate the income yield, capital gain yield, and rate of total return in each of 2017 and 2018 for BlackBerry shares and Scotia Canadian Bond Fund units.

Q: One year ago, Art Vandelay bought Norwood Industries shares for $

One year ago, Art Vandelay bought Norwood Industries shares for $37 per share. Today they are worth $40 per share. During the year, Art received dividends of $0.60 per share. What was his income yield...

Q: Rose purchased units of the Trimark Fund one year ago at $

Rose purchased units of the Trimark Fund one year ago at $24.10 per unit. Today they are valued at $25.50. On the intervening December 31, there was a distribution of $0.83 per unit. (“Distribution” i...