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- Paul agreed to lend Marsha $500. Thereupon Marsha made and delivered her note for $500 payable to Paul or order “ten days after my marriage.” Shortly thereafter Marsha was married. Is the instrument negotiable? Explain.Julie loaned her friend Nathan $2,500. Nathan did not repay the debt and skipped town. Can Julie claim any deduction for this bad debt? In answering this case, use only the Internal Revenue Code for your research.PK was ordered to pay Sangita $15,000 from his RRSP as part of their divorce settlement. Sangita transferred the amount directly from PK's RRSP into her RRIF. Shortly after his divorce, PK married Yasmin, who received $10,000 as a refund of premiums from her late husband's unmatured RRSP. Yasmin received the $10,000 in cash on July 1st of her husband's death and she deposited the entire amount into her bank account. In February of the next year, she transferred the $10,000 into her RRIF. Who must pay income tax on the funds removed from the RRSPs?
- During 2020, Brandi loans her brother Keefer $40,000, which he intends to use to establish a small business. Because Keefer has no other assets and needs cash to establish the business, the agreement provides that Keefer will repay the debt if (and when) sufficient funds are generated from the business. Brandi and Keefer do not establish an interest rate. The business is unsuccessful, and Keefer is forced to file for bankruptcy in 2021. By the end of 2021, it is estimated that the creditors will receive only 50% of the amount owed. In 2022 the bankruptcy proceedings are closed, and the creditors receive 25% of the amount due on the debt. Requirement What is Brandi's bad debt deduction for 2021? For 2022? (Complete all input fields. Enter a "0" if no bad debt deduction can be taken.) Brandi's bad debt deduction for 2021 will be Brandi's bad debt deduction for 2022 will beAlfred owned a term life insurance policy at the time he was diagnosed with a terminal illness. After paying $18,300 in premiums, he sold the policy to a company that is authorized by the state of South Carolina to purchase such policies. The company paid Alfred $125,000. When Alfred died 18 months later, the company collected the face amount of the policy, $150,000. As a result of the sale of the policy, how much is Alfred required to include in his gross income?Laura sold her office building to the accounting firm that bought her firm. Unfortunately, she had to repossess the building after less than a year. Choose the response that correctly states the amount of Laura's gain or loss on the repossessed real property, based on the following facts. The building had a fair market value of $54,000 on the date of repossession. The unpaid balance of the installment obligation at the time of repossession was $56,000, the gross profit percentage was 25%, and the costs of repossession were $600. (a) Loss of $13,400 (b) Loss of $11,400 (c) Gain of $11,400 (d) Gain of $13,400
- Bree and Kyle are not related. During 2020, Bree loans Kyle $15,000, which he intends to use to establish a small business. Under the terms of the loan Kyle agrees to repay Bree the $15,000 plus interest (at a reasonable stated rate) over a five-year period. The business is unsuccessful, and Kyle is forced to file for bankruptcy in 2021. By the end of 2021, it is estimated that the creditors will receive only 25% of the amount owed. In 2022 the bankruptcy proceedings are closed, and the creditors receive 10% of the amount due on the debt. Requirement What is Bree's bad debt deduction for 2021? For 2022? (Complete all input fields. Enter a "0" if no bad debt deduction can be taken.) Bree's bad debt deduction for 2021 will be Bree's bad debt deduction for 2022 will bea married couple, Renata and Lionel, decide to give gifts to help their friends. They choose to treat all gifts given by either spouse to a third party during the year as if the gifts were made one-half by each spouse. Renata gives a 20000 gift to one couple (sam and Diane) and Lionel gives a 16000 gift to a second couple (ray and debra). What is the amount of the reduction in the lifetime exemption from the gifts?Five years ago, alex loaned his son Liam $20,000 to start a business. A note was executed with an interest rate of 8%, which is the Federal rate. The note required monthly payments of the interest with the $20,000 due at the end of 10 years. Liam always made the interest payments until last year. During the current year, Liam notified his father that he was bankrupt and would not be able to repay the $20,000 or the accrued interest of $1,800. Tom is an accrual basis taxpayer whose only income is salary and interest income. The proper treatment for the nonpayment of the note is: a.$3,000 deduction. b.$20,000 deduction. c.No deduction. d.$21,800 deduction.
- Miguel, a 16-year old mechanic’s apprentice, borrowed $3,000 from his next door neighbour, Jono, by telling him that he was 20 years old and had a good, stable income. The loan was payable in three equal fortnightly payments. After the first payment, Miguel stopped paying Jono. Jono wanted to bring a legal action against Miguel but when he discovered his real age, he decided instead to initiate an action in tort for deceit against the latter. Will Jono likely be successful in his action in tort for deceit against Miguel? Explain your answer. (Maximum 400 words)Vic, who was experiencing financial difficulties, was able to adjust his debts as follows: a. Vic is an attorney. Vic owed his uncle $25,000. The uncle told Vic that if he serves as the executor of the uncle's estate, Vic's debt will be canceled in the uncle's will. The $25,000 debt cancellation is Vic's gross income when the uncle dies. b. Vic borrowed $80,000 from First Bank. The debt was secured by land that Vic purchased for $100,000. Vic was unable to pay, and the bank foreclosed when the liability was $80,000, which was also the fair market value of the property. Vic has a $fill in the blank 01cf0405cfe7044_1 as a result of the foreclosure. c. The Land Company, which had sold land to Vic for $80,000, reduced the mortgage on the land by $12,000. The $12,000 reduction in the debt is Vic's gross income and Vic must his basis in the property.Erin's bank foreclosed on her office building when she stopped making payments on her loan. The loan was secured by the building when she purchased it three years ago for $750,000. Erin's Form 1099-A is shown below. If the building is sold for the fair market value (FMV), how much of Erin's personal assets can the lender attempt to collect to satisfy the judgment? (Answer choices are below the image.) LENDER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. OAK RIDGE BANK 301 AUSTIN STREET YOUR CITY, YS XXXXX (XXX) 555-5678 LENDER'S TIN XX-XXXXXXX BORROWER'S name ERIN HERNANDEZ Street address (including apt. no.) 308 VIRGINIA AVENUE CORRECTED (if checked) BORROWER'S TIN XXX-XX-XXXX Account number (see instructions) XXXXXXXX Form 1099-A (Rev. 1-2022) City or town, state or province, country, and ZIP or foreign postal code YOUR CITY, YS XXXXX (keep for your records) $615.000 $595,000 $20,000 OSO (None of Erin's personal…