Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of theirdiscussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accountingbalance sheet. The relevant information is summarized as follows:CashReceivablesBuildingLandTotalPayablesMortgage*TotalFMV$ 14,00021,00094,000204,000$333,000$ 25,000 $ 25,000108,000108,000$133,000$133,000AdjustedBasis$ 14,000Gain or loss recognizedCorporate-level tax21,00047,00074,000$156,000Show Transcribed TextThe mortgage is attached to the building and land.Ernesto was asking for $470,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales pricewas an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will berecorded as goodwill. (Leave no answer blank. Enter zero if applicable.)Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $470,000.Appreciationa. What amount of gain or loss does BLI recognize if the transaction is structured as a stock sale to Amy and Brian? What amount ofcorporate-level tax does BLI pay as a result of the transaction, assuming a tax rate of 34 percent?Gain or loss recognized47,000130,000$177,000b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a stock sale to Amy and Brian?

Recognized gain is calculated by all the payments and the received amount is considered to know…

Answered: Amy and Brian were investigating the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of these businesses would NOT be required to file a balance sheet with the tax return? ORB, a C corporation, with $245,000 in gross receipts and $50,000 in assets. DBS, a partnership, with $275,000 in gross receipts and $150,000 in assets. JAS, an S corporation, with $175,000 in gross receipts and $260,000 in assets. BLA, a C corporation, with $240,000 in gross receipts and $290,000 in assets.
1.(3)
Income Tax. Deferred Tax Liability and Deferred Tax Asset (PAS 12) Problem 11. The 2015 income statement of Rob Inc. reported a financial income of P3,000,000. The tax accountant and tax auditor have found the following items included in such amount: Capital gain from the sale of a land classified as capital asset Illegal contribution to political parties and candidates Interest income from a 6-year time deposit Representation expenses in excess of the amount allowed by NIRC 400,000 P300,000 200,000 500,000 Based on the analysis conducted by the accountant and tax auditor, they also found out the following differences in tax and accounting treatments: • Unearned revenue of P200,000 was recorded by Rob Inc. in its accounting books but was reported as income in the corporate income tax return. • Installment sales of P300,000 was recorded by Rob Inc. in its accounting books but was only collected on year 2016. • Provision for lawsuit for P400,000 was recognized by Rob Inc. in its…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Ad justed Tax Basis $ 6,000 9,000 56,500 139,000 $ 210,500 PMV Appreciation Cash Receivables Building $ 6,000 9,000 113,000 239,000 ६ 367,000 56,500 100,000 $ 156,500 Land Total Payables Mortgage $ 12,000 132,000 $ 144,000 $ 12,000 132,000 $144,000 Total * The mortgage is attached to the building and land. Ernesto was asking for $493,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will be recorded as goodwill. Assume Ernesto…
Required information [The following information applies to the questions displayed below.] During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.) Capital Asset L stock M stock. N stock 0 stock Antiques Rental home Market Value $ 53,800 31,800 33,800 29,800 10,800 303,800* Tax Basis $ 42,900 42,800 23,900 36,800 Gross tax liability 5,900 91,900 Holding Period > 1 year > 1 year 1 year > 1 year *$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property). Ignore the Net Investment Income Tax. a. Given that Ron and Anne have taxable income of only $18,100 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2023 assuming they file a joint return?
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Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: 24,200 Adjusted Tax Basis $ 24,000 Appreciation Cash FMV $ 24,000 Receivables 24,200 Building 112,000 56,000 56,000 Land 238,500 79,500 159,000 Total $ 398,700 $ 183,700 $ 215,000 Payables Mortgage* $ 25,600 128,300 $ 25,600 128,300 Total $ 153,900 $ 153,900 *The mortgage is attached to the building and land. Ernesto was asking for $504,100 for the company. His tax basis in the BLI stock was $144,000. Included in the sales price was an unrecognized customer list valued at $183,000. The unallocated portion of the purchase price ($76,300) will be recorded as goodwill. Note: Negative amounts should be indicated by a minus sign. a. What amount of gain or loss does BLI recognize if the…
In the current year, Phillip Hard earned the following income: • Employment income • Business Income $90,000 $15,000 • Property income 2,000 • Gains: • Shares of Corporation X $12,000 • Personal-use property 7,000 • Listed personal property 1,600 20,600 • Losses: • Shares of Corporation Y (15,000) • Shares of small business corporation (4,000) • Listed personal property (300) (19,300) $108,300 Determine net income in accordance with the aggregating formula in Section 3 of the ITA. Assume Other deductions total $2,000.
19. Michael Campbell, age 66, is an instrument technologist in the bauxite industry. Michael provides you with the following information to compute his income tax liability for year of assessment 2013. The profit and loss account relating to the business as at December 31, 2013 is as follows: Revenue from instrument contracts Other income Less Expenses: Wages & salaries Utilities Depreciation Legal fees General expenses Professional fees Net Profit $ 700,000 280,000 570,000 820,000 730,000 680,000 228 Trade, Business, Profession & Vocation Continued $ 10,200,000 70,000 3,780,000 6,490,000 Notes • The legal fees relate to the new building purchased during the year. Included in general expenses are utility bills amounting to $75,000 paid by the business for Michael's house. . Other income relates to gross interest on a fixed deposit received as follows: Gross interest for the period January to June received July 31, 2013 amounted to $60,000, tax deducted at source was $15,000. Gross…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company’s tax accounting balance sheet. The relevant information is summarized as follows: Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign. FMV Adjusted Tax Basis Appreciation Cash $ 10,000 $ 10,000 Receivables 15,000 15,000 Building 100,000 50,000 50,000 Land 225,000 75,000 150,000 Total $ 350,000 $ 150,000 $ 200,000 Payables $ 18,000 $ 18,000 Mortgage* 112,000 112,000 Total $ 130,000 $ 130,000 * The mortgage is attached to the building and land. Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sales price was an unrecognized customer list valued at $100,000. The unallocated portion of the purchase price…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis Appreciation Cash $ 14,500 $ 14,500 Receivables 18,800 18,800 Building 102,500 51,250 51,250 Land 260,250 86,750 173,500 Total $ 396,050 $ 171,300 $ 224,750 Payables $ 19,100 $ 19,100 Mortgage* 159,000 159,000 Total $ 178,100 $ 178,100 * The mortgage is attached to the building and land. Ernesto was asking for $445,700 for the company. His tax basis in the BLI stock was…
Chunhua Wong is financial risk management consultant; she owns and manages Wong Financial Management Services Ltd. Wong Financial Management Services Ltd is a limited company incorporated under the UK Companies Act 2006. During the tax year 2020/21, Wong Financial Management Services Ltd’s taxable turnover (excluding capital items) was £204,050. The company has seven employees. Four employees were provided with cars that were used for both work and private purposes. All fuel is paid for by Wong Financial Management Services Ltd, including fuel used by employees for private journeys. Three employees were provided with living accommodation: this living accommodation was non-job related. Chunhua also sub-contracts some of the company’s work to Kong Shang Murray, a sole trader and self-employed financial derivatives specialist. Which of the following are chargeable to Wong Financial Management Services Ltd for the tax year 2020/21? A. Corporation tax; income tax; Class 4…

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