Atty. Guazon owns 30% of the capital and profits of his law office. The law office reported P5,000,000 profits in 2021.
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Atty. Guazon owns 30% of the capital and profits of his law office. The law office reported P5,000,000 profits in 2021.
a.) How much final tax will be withheld from Atty. Guazon if the law office distributed 50% of its 2021 net income?
b.) What if the
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- Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2022, she sells the following long-term assets used in her business: Asset Building Equipment Sales Price $ 233,800 83,800 Description Taxable income Tax liability Cost $ 203,800 151,800 Lily's taxable income before these transactions is $194,300. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. $ Amount Accumulated Depreciation $ 55,800 26,800 238,900Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2023, she sells the following long-term assets used in her business: Asset Building Equipment Sales Price $ 230,000 80,000 Description Taxable income Tax liability Lily's taxable income before these transactions is $190,500. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Cost $ 200,000 148,000 $ Amount Accumulated Depreciation $ 52,000 23,000 227,500Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Amanda's marginal income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 20%. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is not eligible for the QBI deduction. Further, when computing your answers, include the self-employment tax (use a 2.9% marginal rate for self-employment income because Amanda has salary over $147,000 from her employer) but not the additional Medicare tax or the net investment income tax. b. What is the overall tax rate on BAL's income in the first year if BAL is organized as an LLC or as a C corporation? Note: Round intermediate calculations to the nearest whole dollar. Round your final answers to 2 decimal…
- Check my work. Bill and Mary filed a joint Federal income tax return this year. Mary owns a 30% interest in MAJIC Partnership, a women’s dress boutique. Mary’s share of the partnership’s net income is $280,000. Her shares of the partnership’s W–2 wages and unadjusted basis of depreciable property are $100,000 and $300,000, respectively. Mary’s share of the partnership income is $280,000 * 20% = $56,000 50% of W-2 wages is $100,000*.5= $50,000 25% of W-2 wages plus 2.5% of adjusted basis of depr prop = $100,000 * 25% +$300,000 * 2.5% =$32,500 The QBI deduction is $50,000 per the limitation phase What is the maximum QBI deduction if MAJIC’s income was from qualified services and Bill and Mary’s total taxable income was $450,000? The QBI deduction can be used for qualified service businesses only if the taxable income before the QBI deduction does not exceed the threshold. Since MAJIC’s…Check my work. 25 Bill and Mary filed a joint Federal income tax return this year. Mary owns a 30% interest in MAJIC Partnership, a women’s dress boutique. Mary’s share of the partnership’s net income is $280,000. Her shares of the partnership’s W–2 wages and unadjusted basis of depreciable property are $100,000 and $300,000, respectively. What is Bill and Mary’s maximum QBI deduction if their total taxable income is $300,000? Since their total taxable income is less than the threshold limit of $326,600, the deduction is calculated as 20%. $280,000 * 20% (QBI deduction) = $56,000 What is the maximum QBI deduction if Bill and Mary’s total taxable income is $450,000? Since $450,000 exceeds the threshold limit of $326,600, and above $100,000 over in the case of filing joint returns, the limitation phase is applicable.the early part of 2021, the partners of HughJacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2020 but had never used an accountant's services Hugh and Jacobs began the partnership by contributing $150,000 and $100,000 in cash, respectivelyHugh was to work occasionally at the business, and Jacobs was to be employed full-time. They decided that year-end profits and losses should be assigned as follows: Each partner was to be allocated 10 percent interest computed on the beginning capital balances for the period A compensation allowance of $5,000 was to go to Hugh with a $25,000 amount assigned to Jacobs Any remaining income would be split on a 4:6 basis to Hugh and Jacobs, respectively 2020, revenues totaled $175,000, and expenses were $146,000 (not including the partnerscompensation allowance)Hugh withdrew cash of $9,000 during the year, and Jacobs took out $14,000. In addition, the business paid $7,500 for repairs made to Hugh's home and…
- Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $264,500 for the current year. Because of the lower tax rates on qualifying dividends, Kristen is considering substituting a dividend for the bonus. Assume that the tax rates are 24% for Kristen and 21% for Egret Corporation. Round your answers to nearest dollar, if required. a. How much better off would Kristen be if she were paid a dividend rather than salary? If Kristen were paid a bonus, she would receive s 201,020✔ after taxes. If Kristen receives a dividend rather than salary, she would receive 224,825✔ after taxes. Thus, she would be better off by receiving the dividend Feedback Check My Work b. How much better off would Egret Corporation be if it paid Kristen a salary rather than a dividend? The net after-tax cost of the bonus for Egret Corporation would be s 7,975 X Therefore, Egret would be better off by s be s Check My Work 208,955✔ and the net after-tax cost for the dividend would…ssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator%=&inprogress=false U William, a CPA, owns a 75% interest in Burglar Concrete Company (BCC). BCC is organized as a partnership. During the current year, William prepares BCC's tax return and receives his normal $300 fee for the preparation of the return. I. BCC cannot deduct the $300 fee because of the related party rules. I. William must recognize the $300 fee as income. Oa. Only statement I is correct. Ob. Only statement II is correct. Oc. Both statements are correct. Od. None of these statements are correct.7.Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $100,000 in return for 80 percent of the stock in the corporation. Sam’s tax basis in the inventory is $60,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $25,000. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) What amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, does he recognize? Income Gain or loss realizedIncome Gain or loss recognized
- Bebe owns 30% of the capital and profits of his law office. The law office reported P5,000,000 profits in 2021. How much final tax will be withheld from Bebe if the law office distributed 50% of its 2021 net income? *8. Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $100,000 in return for 80 percent of the stock in the corporation. Sam’s tax basis in the inventory is $60,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $25,000. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) What is Sam’s tax basis in the stock he receives in return for his contribution of property to the corporation?What Constitutes Income (LO. 1) Two Sisters is a partnership that owns and operates a farm. During the current year, the partnership raised and harvested hay at a cost of $20,000. It then traded half the hay for quarter horse breeding stock-young horses worth $30,000. Two Sisters fed the remainder of the hay to the horses, which were worth $50,000 at the end of the year. a. What is the tax consequence of the exchange? A of $ b. What amount can they deduct as current operating expenses from these transactions during the current year?: c. What is the basis of the horses at year-end? d. The partnership has income of $ from these transactions during the current year.
