13. In 2016, King, an employee of Advanced Corporation, is indebted to PhilipCorporation in the amount of P50,000. He has also a liability with Rex ofP25,000. During the year, the Board of. Directors of Philip Corporatondecided to condone his liability, he being a stockholder of said corporation.To be relieved of his liability, King was required by Rex to work in hisrestaurant for two (2) months as waiter. As a consequence, King filed hisvacation leave from Advanced Corporation for the same period therebyreceiving the monetized value of his leave credits in the amount of P6,000.While working as waiter in the restaurant, he received tips from theCS Scanned with CamScanner customers totaling to P5,000. Said amount was not accounted anymore byRex. How much is the taxable income of King in 2016?a.P 36,000C.30,000b.25,000d.86,000CS Scanned with CamScanner

Amount owed to Philip corporation = 50,000 Liability to Rex = 25,000 Income from tips = 5,000 Income…

Answered: 13. In 2016, King, an employee of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy’s employer withheld $10,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child (age 14) who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions, including $2,000 of charitable contributions to his church. (Use the tax rate schedules.) b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $4,000. What is Jeremy’s tax refund or tax due including the tax on the capital gain?
Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:● Utilities: $2,000● Office Rent: $14,000● Self-Employment Tax: $5,000● Salary for her secretary: $20,000● Fines/Penalties: $8,000● Payroll Taxes (Employer Portion): $1,000● Business Meals: $2,000● Bribe to police officer to forgive parking violation $1,500Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income. Also, during the year a tornado damaged the roof of their personal…
Jackson, an individual, is a shareholder in Cadduceus Corp., a C corporation with $40,000 in accumulated earnings and profits. Cadduceus Corp. redeems some of its stock from Jackson for $200,000 as part of a qualifying partial liquidation. Jackson's adjusted basis in the stock at the time of redemption was $50,000. For tax purposes, how will Jackson report the effects of this redemption of stock? As a $40,000 dividend only. As a $150,000 capital gain. As a $40,000 dividend and $110,000 capital gain. As a $10,000 capital loss.
Heather owns all of the shares of Thompson Consulting Ltd (TCL), an IT consulting firm with 10 employees. TCL has a December 31 st year-end. Heather delegates all of her oversight tasks to various managers because she is busy at home raising her family. On July 25, 2011, Heather borrowed $100,000 from TCL for the purchase of a new home on a non-interest bearing basis. A loan agreement is in place that requires her to repay the full amount in five years. She has never reported anything on her personal income tax return from the loan. Assuming that you are preparing Heather's personal tax return for the first time, which of the following statements is correct? A). There are no income tax consequences because the funds were borrowed for the purchase of a home and there is a bona fide arrangement to repay the loan. B). Heather will have a deemed interest benefit in 2011,2012 and 2013. C). Heather will have an income inclusion of $100,000 in 2013 and a deemed interest benefit in 2011, 2012…
The IRS determined that John underpaid his 2016 tax liability by $6,000 due to negligence. In 2018, John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS. a. Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation. b. What part of the deficiency, income taxes, interest, and penalty, is deductible by John on his current tax return? Explain.
This year, Faro, Incorporated, a calendar year taxpayer, issued 500 shares of its publicly traded stock as a bonus to its employee, Darius. On the date of issuance, the stock's fair market value was $17,600. Required: a. What are the tax consequences to Darius and Faro if Darius's ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of forfeiture). b. What are the tax consequences to Darius and Faro if the terms of the bonus require that Darius must hold the stock five years from the date of issuance. If employment is terminated before that date, the stock must be forfeited back to Faro. Darius made no election with respect to the restricted stock. Complete this question by entering your answers in the tabs below. Required A Required B ces What are the tax consequences to Darius and Faro if Darius's ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of…
Collin's tax liability for last year was $22,000, and his AGI did not exceed $150,000. Collin requests an automatic extension for filing his current year individual return but does not pay any additional tax with his extension request. By April 15 of the following year, Collin has paid $24,000 of taxes in the form of wage withholding and estimated taxes. Collin files his current year return and pays the balance of the taxes due on July 21 of the following year. Requirement What penalties will Collin owe if his current year tax is $28,000? $26,000? (Complete all input fields. Enter a 0 if there is no penalty.) Penalty Underpaying estimated tax Failure-to-file Failure-to-pay tax if Collin's tax is $28,000 if Collin's tax is $26,000
7
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Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $199,000 tax basis in his LLC interest that includes his $179,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to $199,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $238,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $18,000. Farell is single and has no other sources of business income or loss. a-1. Determine how much of the Sierra Vista loss Farell will currently be able to deduct on his tax return for year 1. a-2. List the losses suspended due to tax-basis, at-risk, and passive activity…
6
Bob, a CPA, earns $200,000 from his accounting practice in the current year. He receives $25,000 in dividends and interest during the year as well as $10,000 of income from a passive activity. In addition, he incurs a loss of $65,000 from an investment in a passive activity, a $15,000 loss from a nonpassive activity ($10,000 at-risk basis), and a short-term capital loss of $20,000. What is Bob's AGI for the current year? 190,000 207,000 212,000 235,000

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