26. Rex, a cash basis calendar year taxpayer, runs a bingo operation that is illegal understate law. During 2020, a bill designated H.R. 9 is introduced into the state legislature,which, if enacted, would legitimized bingo games. In 2020, Rex had the following expenses:$247,000Operating expenses in conducting bingo gamesPayoff money to state and local police24,000Newspaper ads supporting H.R. 93,000Political contributions to legislators who support H.R. 98,000Of these expenditures, Rex may deduct:a. $ 247,000.b. $ 250,000.c. $ 258,000.d. $ 282,000.e. None of these.

Bingo Game: It is the numbers game played by the individual in cash. As per the law its a illegal.…

ate law. During 2020, a bill designated H.R. 9 is introduced into the state legislature, nich, if enacted, would legitimized bingo games. In 2020, Rex had the following expens $247,0 perating expenses in conducting bingo games yoff money to state and local police 24,C 3,C ewspaper ads supporting H.R. 9 litical contributions to legislators who support H.R. 9 8,C these expenditures, Rex may deduct: $ 247.000.

ate law. During 2020, a bill designated H.R. 9 is introduced into the state legislature, nich, if enacted, would legitimized bingo games. In 2020, Rex had the following expens $247,0 perating expenses in conducting bingo games yoff money to state and local police 24,C 3,C ewspaper ads supporting H.R. 9 litical contributions to legislators who support H.R. 9 8,C these expenditures, Rex may deduct: $ 247.000.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 35P: Trip Garage, Inc. (459 Ellis Avenue, Harrisburg, PA 17111), is an accrual basis taxpayer that...

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On June 30, 2019, Kelly sold property for 240,000 cash and a 960,000 note due on September 30, 2020. The note will also pay 6% interest, which is slightly higher than the Federal rate. Kellys cost of the property was 400,000. She is concerned that Congress may increase the tax rate that will apply when the note is collected. Kellys after-tax rate of return on investments is 6%. a. What can Kelly do to avoid the expected higher tax rate? b. Assuming that Kellys marginal combined Federal and state tax rate is 25% in 2019, how much would the tax rates need to increase to make the option identified in part (a) advisable?
Trip Garage, Inc. (459 Ellis Avenue, Harrisburg, PA 17111), is an accrual basis taxpayer that repairs automobiles. In late December 2019, the company repaired Samuel Mosleys car and charged him 1,000. Samuel did not think the problem had been fixed and refused to pay; thus, Trip refused to release the automobile. In early January 2020, Trip made a few adjustments and convinced Samuel that the automobile was working properly. At that time, Samuel agreed to pay only 900 because he did not have the use of the car for a week. Trip said fine, accepted the 900, and released the automobile to Samuel. An IRS agent thinks Trip, as an accrual basis taxpayer, should report 1,000 of income in 2019, when the work was done, and then deduct a 100 loss in 2020. Prepare a memo to Susan Apple, the treasurer of Trip, with the recommended treatment for the disputed income.
David is a CPA and enjoys playing the lottery. This year David won 10,000 in lottery scratch-off tickets. He spent 200 purchasing the tickets. Which statement is true regarding Davids winnings? a. David must include 9,800 in gross income. b. David must include the 10,000 in gross income and can deduct 200 as an itemized deduction not subject to the 2%-of-AGI limitation. c. David must include 10,000 in gross income and can deduct 200 as an adjustment to AGI. d. Davids winnings are not taxable.
During 2021, Ellen Evans, made cash contributions, as listed below. Cash contribution to her church Cash contribution to the government of the of Virginia Commonwealth Cash contribution to the Democratic party Ellen also made in-kind contributions, as listed below. $ 4,000 Contribution of used clothing to the Salvation Army (market value of $300, basis of $1,900) Contribution of XYZ, Inc. capital stock with a long-term holding period (market value of $10,000, basis of $7,000) Finally, Ellen, a self employed attorney, performed 10 hours of legal services for her church at no charge. Assume that Ellen normally charges $250 per hour for her services. 18,300 15,300 None of the above 1,000 500 Assuming that Ellen has substantial adjusted gross income and that the charitable contribution percentage limitation is not an issue, what total charitable contribution amount may Ellen claim on her 2019 Form 1040? A $ 15,800 B 17,800 C D E
Calvin reviewed his canceled checks and receipts this year (2021) for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005. Donee Item Cost FMV Hobbs Medical Center IBM stock $ 5,600 $ 28,000 State Museum Antique painting 5,300 3,180 A needy family Food and clothes 460 280 United Way Cash 14,000 14,000 Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances. (Leave no answer blank. Enter zero if applicable.) c. Calvin’s AGI is $64,000. d. Calvin’s AGI is $130,000 and Hobbs is a private nonoperating foundation. e. Calvin’s AGI is $130,000, but the painting is worth $28,000.
Sam’s Sports Training, a cash-method taxpayer, provides $40,000 worth of fitness training to the Sac Republic Basketball Club on credit in 2019. In 2020, the Sac Republic dissolved its business operations before paying Sam’s any of the $40,000. The debt is wholly worthless in 2020. What amount can Sam’s deduct for bad debt in 2020? Enter as a positive number
Mr. Wu was a marketing manager. He received an annual salary totaling $848,000 and was provided with a rent--free flat by his employer during the year ended 31 March 2023. He paid an annual membership fee of $1,600 to the Institute of Marketing in December 2022 and donated cash of $1,000 to the Community Chest in March 2023. He contributed $31, 500 to an MPF scheme (Assume voluntary contribution, if any, are not paid into a TVC account). His wife died three years ago. He has to maintain a son aged 15 and his two parents, both of whom are aged over 60. His parents resided with him throughout the year ended 31 March 2023. The salaries tax liability of Mr. Wu for the year of assessment 2022/23 is:
16.
Calvin reviewed his canceled checks and receipts this year (2021) for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005. Donee Item Cost FMV $ 9,800 7,400 $ 70,000 4,440 Hobbs Medical Center IBM stock State Museum Antique painting A needy family United Way Food and clothes 880 530 Cash 56,000 56,000 Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances. (Leave no answer blank. Enter zero if applicable.) c. Calvin's AGI is $169,000. Charitable contribution deduction Carryover
Calvin reviewed his canceled checks and receipts this year (2021) for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005. Donee Item Cost FMV Hobbs Medical Center IBM stock $ 5,400 $ 26,000 State Museum Antique painting 5,200 3,120 A needy family Food and clothes 440 260 United Way Cash 12,000 12,000 Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances e. Calvin’s AGI is $120,000, but the painting is worth $22,000. Charitable contribution deduction? Carryover ?