ACCT 553 Entire Course Federal Taxes and Management Decisions
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ACCT 553 Entire Course Federal Taxes and Management Decisions
ACCT 553 Week 1 Homework
Chapter 1 (5 pts)
- Briefly discuss the purpose of the Sixteenth Amendment
Chapter 2 (5 pts)
- Explain the two “safe harbors” available to an Individual taxpayer to avoid a penalty for underpayment of estimated tax.
Chapter 3 (5 pts)
- Explain the distinction between an “above the line” deduction (i.e. FOR AGI) and a below the line deduction (i.e. FROM AGI). Which one is more valuable?
Chapter 13 (5 pts)
- What is an Installment Sale? Is it a form of income “deferral” ? Whencan’tyou elect this form of reporting?
ACCT 553 Week 2 Homework
- Your brother is short on cash and cannot pay his rent this month. You pay his rent for him. Is this taxable income to your brother? Do you get a deduction? (2 pts)
- Which of the following items would beexcludedfrom income? (a) $100 bill found under the sugar caddy at the restaurant (b) Inheritance of a car from your grandmother valued at $5,000. (c) Loan from your father-in-law to start your business, (d) Child Support received totaling $16,500. (4 pts)
- Shaun & Kayla earned the following in 2013: Interest on a Savings account of $36, Interest on a U.S. Series EE Savings Bond of $25, Interest on a CD that has not matured yet of $20. How much taxable interest income must they report on their 2013 tax return? (4 pts)
- Explain what a Cafeteria Plan is (hint: it has nothing to do with what you eat between classes ). (5 pts)
- Explain the limitations placed on the deductibility of Business Gifts? What code section dictates this treatment? (5 pts)
ACCT 553 Week 3 Homework
- In your “own” words, please describe what a “Suspended Loss” is, how it is generated and when it is becomes deductible. (5 pts)
- Please describe “Active Participation” as it relates to a taxpayer’s involvement in an investment in Real Estate. (5 pts).
- Macy had a lot of medical expenses this year that were not covered by her insurance (either due to a deductible, co-insurance, or co-pay). Her un-reimbursed qualifying medical expenses total $8,356 and her AGI for 2013 is $45,000. Assuming she will itemize on her 2013 tax return, how much of her medical expenses will she be able to deduct? (5 pts)
- Heather & Terry have a mortgage on their primary residence of $750,000 and a mortgage on their vacation home of $410,000. In 2013, they incurred $46,400 of mortgage interest expense. How much, if any, of that interest is deductible on Schedule A? (5 pts)
ACCT 553 Week 3 Quiz
- (TCO A) A taxpayer may litigate a tax dispute without first paying the tax in the:
- (TCO F) A business bad debt is deductible for tax purposes as a(n):
- (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when:
- (TCO A) Which of the following constitutes tax evasion?
- (TCO C) Which of the following items is not subject to federal income tax?
- (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt. Which of the following statements is correct concerning the impact of this transaction?
- (TCO I) Johnny, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must include in his 2012 gross rental income.
- (TCO F) Section 197’s intangible assets, such as patents and trademarks, are amortized for tax purposes over:
- (TCO E) Explain the constructive receipt doctrine.
- (TCO G) Answer the following questions concerning the sources of tax law.
ACCT 553 Week 4 Homework
- Please describe the concept of “double taxation” and discuss which entity(ies) are subject to this type of taxation. (5 pts)
- What type of taxpayers are considered “eligible” taxpayers with regard to special ordinary loss treatment of IRC Section 1244 stock? (5 pts.)
- Please describe how the treatment of capital gains(losses) differ for a C Corporation as compared to an Individual. ( 5 pts.)
- Please describe the concept of “Depreciation recapture”. ( 5 pts.)
ACCT 553 Week 4 You Decide
Jane Smith Case
How is the $300,000 treated for purposes of federal tax income?
Jane Smith Tax Issues:
(a) What are the different tax consequences between paying down the mortgage debt and assuming a new mortgage debt for federal income tax purposes?
(a) Should John and Jane file separate or joint tax returns?
ACCT 553 Week 5 Homework
- Please explain how Charitable Contributions come into play in determining “Corporate” taxable income. (5 pts)
- What happens to a loss on the Corporate Tax Return (Form 1120)? Does it pass through to the shareholders? Is it available for future or past periods? Please explain in detail. (5 pts.)
- Please describe the purpose of Sch3edules M-1 and M-3. When is a Schedule M-3 required in lieu of a Schedule M-1. (5 pts.)
- Please define and differentiate a Spin-off, Split-off, and Split-up. ( 5 pts.)
ACCT 553 Week 5 Quiz
- (TCO E) For federal tax purposes, royalty income not derived in the ordinary course of a business is classified as:
- (TCO F) When comparing corporate and individual taxation, the following statements are true, except:
- (TCO H) Al and Amy file a joint return for the 2012 tax year. Their adjusted gross income is $80,000. They had a net investment income of $8,000. In 2012, they had the following interest expenses:
Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $10,000
- (TCO B) Charitable contribution deductions for capital gains property made by individuals without a reduction for long-term capital gains to public charities are limited to:
- (TCO A) The following taxes were paid by Tim:
Real estate taxes on his home: $2,000
State income taxes: $900
State gasoline tax (personal use of automobile): $150
- (TCO F) Hoover, Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and dividends received from a 45 percent-owned domestic corporation of $120,000. Hoover’s tax position for the year is:
- (TCO G) All of the outstanding stock of a closely held C corporation is owned equally by David Smith and Steve Bufusno. In 2012, the corporation generates taxable income of $30,000 from its active business activities. In addition, it earns $20,000 of interest from investments and incurs a $40,000 loss from a passive activity. How much income does the C corporation report for 2012?
- (TCO G) Mike, who is single, has $100,000 of salary, $15,000 of income from a limited partnership, and a $30,000 passive loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $100,000. Of the $30,000 loss, how much is deductible?
- (TCO F) Pam owns a sole proprietorship, and Kevin is the sole shareholder of a C (regular) corporation. Each business sustained a $16,000 operating loss and a $2,500 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners?
- (TCO G) Briefly (1) define and (2) discuss the purpose and impact of each of the following:
- net operating loss
b. at-risk rules
- tax shelter
ACCT 553 Week 6 Homework
- Miyasyke, Inc., a calendar year S corporation, has five equal shareholders at the end of the tax year. Miyasyke had
$75,000 of taxable income. Miyasyke made distributions to its shareholders of $32,000 each, for a total of $160,000. Each shareholder’s basis in the S corporation is $100,000 at the beginning of the tax year. What amount from Miyasyke should be included in each shareholder’s gross income?
For which of the following entities is the owner’s basis increased by the owner’s share of profits and decreased by the owner’s share of losses, but is not affected by the entity’s bank loan increases or decreases?
ACCT 553 Week 6 You Decide
Mark, and John Case
Part I: Discuss the various forms of organization that are available to Penelope, Mark, and John
Part II: Make your recommendation as to what form of organization you believe will be best, and be sure to explain the reasoning for your choice.
Part III: Discuss the tax consequences of contributing cash, property, and/or services to the new entity.
ACCT 553 Week 7 Homework
- Please explain the distinction between a “realized” gain and a “recognized” gain. (5 pts)
- Are there any limits to the deductibility of losses on sales and exchanges between related parties? What code section defines this limitation? (5 pts.)
- What is the basis of property received (i.e. new property) in a like-kind exchange? What is the holding period for the new asset? (5 pts.)
- David purchased stock in Zoll Corporation in 1985 for $6,000. On April 16, 2013 he gifted the stock to his daughter Susan; at the time of the gift, the Zoll stock was valued at $250,000. Susan sold the stock the next month for $ 252,000. What is Susan’s gain or loss and what is the character of the gain or loss? ( 5 pts.)
ACCT 553 Midterm
- (TCO C) Under current accounting practice, intangible assets are classified as (Points: 5)
amortizable or unamortizable.
limited-life or indefinite-life.
specifically identifiable or goodwill-type.
legally restricted or goodwill-type.
- (TCO C) Which of the following intangible assets should not be amortized? (Points: 5)
All of these intangible assets should be amortized.
- (TCO C) The intangible asset goodwill may be (Points: 5)
capitalized only when purchased.
capitalized either when purchased or created internally.
capitalized only when created internally.
written off directly to retained earnings.
- (TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of ten years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is five years. What amount should be reported for patent amortization expense for 2010? (Points: 5)
- (TCO C) During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May’s assets when acquired were as follows:
How should the $500,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($1,000,000) be accounted for by Bond? (Points: 5)
The $500,000 difference should be credited to retained earnings.
The $500,000 difference should be recognized as a gain.
The current assets should be recorded at $540,000 and the noncurrent assets should be recorded at $760,000.
A deferred credit of $500,000 should be set up and then amortized to income over a period not to exceed forty years.
- (TCO D) Which of the following is a condition for accruing a liability for the cost of compensation for future absences? (Points: 5)
The obligation relates to the rights that vest or accumulate.
Payment of the compensation is probable.
The obligation is attributable to employee services already performed.
All of these are conditions for the accrual.