I am searching for the correct answer to this general accounting problem with proper accounting rules. Blueberry Corp. has accumulated earnings and profits at the end of the year of$350,000. Blueberry pays a salary and bonus of $180,000 to Sarah, itspresident. Blueberry's taxable income before the salary and bonus is $240,000.The IRS classifies $60,000 of the salary and bonus as unreasonable. CalculateBlueberry's taxable income after the reclassification.a. $60,000b. $120,000c. $180,000d. $240,000

Step 1: Definition of Taxable Income after IRS ReclassificationWhen the IRS reclassifies a portion…

Answered: Blueberry Corp. has accumulated…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 43P

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Kurstie received a 800 state income tax refund this year. Kurstie deducted 3,000 of state income taxes paid in the prior year as part of her itemized deductions. Which of the following statements regarding the taxability of Kursties refund is true? a. If Kursties itemized deductions exceeded the standard deduction by 200, then the 800 refund is included in gross income. b. If Kursties itemized deductions exceeded the standard deduction by 200, then 200 of the refund is included in gross income. c. If Kurstie claimed the standard deduction instead, then the 800 refund is taxable. d. Kurstie must include 3,000 in gross income in the current year.
B Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31,2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1,2020; the interest is not paid until 2021 . How much can B Corporation deduct on its 2019 tax return for these two expenses? $0 $4,000 $15,000 $19,000 $12,000
Troy, a cash basis taxpayer, is employed by Eagle Corporation, also a cash basis taxpayer. Tray is a full-time employee of the corporation and receives a salary of 60,000 per year. He also receives a bonus equal to 10% of all collections from diems he serviced during the year. Determine the tax consequences of the following events to the corporation and to Troy: a. On December 31, 2019, Troy was visiting a customer. The customer gave Troy a 10,000 check payable to the corporation for appraisal services Troy performed during 2019. Troy did not deliver the check to the corporation until January 2020. b. The facts are the same as in part (a), except that the corporation is an accrual basis taxpayer and Troy deposited the check on December 31, but the bank did not add the deposit to the corporations account until January 2020. c. The facts are the same as in part (a), except that the customer told Troy to hold the check until January 2020 when the customer could make a bank deposit that would cover the check.
Last year Aleshia identified 15,000 as a nonbusiness bad debt. In that tax year, before considering the tax implications of the nonbusiness bad debt, Aleshia had 100,000 of taxable income, of which 12,000 consisted of short-term capital gains. This year Aleshia collected 8,000 of the amount she had previously identified as a bad debt. Determine Aleshias tax treatment of the 8,000 received in the current tax year.
How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2019, customers had made valid claims for 600,000 that were not paid until 2020. Also, the company estimates that another 400,000 in claims from 2019 sales will be filed and paid in 2020. b. The accrual basis taxpayer reported 200,000 in corporate taxable income for 2019. The state income tax rate was 6%. The corporation paid 7,000 in estimated state income taxes in 2019 and paid 2,000 on 2018 state income taxes when it filed its 2018 state income tax return in March 2019. The company filed its 2019 state income tax return in March 2020 and paid the remaining 5,000 of its 2019 state income tax liability. c. An employee was involved in an accident while making a sales call. The company paid the injured victim 15,000 in 2019 and agreed to pay the victim 15,000 a year for the next nine years.
Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2019, Bigham sold the following customer contracts: Determine the income to be recognized in taxable income in 2019 and 2020.
Arthur Wesson, an unmarried individual who is age 68, reports taxable income of 510,000 in 2019. He records positive AMT adjustments of 80,000 and preferences of 35,000. Arthur itemizes his deductions, and his regular tax liability in 2019 is 153,694. a. What is Arthurs AMT? b. What is the total amount of Arthurs tax liability? c. Draft a letter to Arthur explaining why he must pay more than the regular income tax liability. Arthurs address is 100 Colonels Way, Conway, SC 29526.
Alec Baldwin, Inc., has accumulated earnings and profits at the end of the year of $350,000. Alec Baldwin pays a salary and bonus of $180,000 to Michael, its CEO. Alec Baldwin's taxable income before the salary and bonus is $260,000. The IRS classifies $60,000 of the salary and bonus as unreasonable. Calculate Alec Baldwin's taxable income after the reclassification. a. $20,000 b. $80,000 c. $140,000 d. $260,000 e. None of the above
year Apricot, Inc., has accumulated earnings and profits at the end of the of $275,000. Apricot pays a salary and bonus of $200,000 to Donald, its CEO. Apricot's taxable income before the salary and bonus is $225,000. The IRS classifies $75,000 of the salary and bonus as unreasonable. Calculate Apricot's taxable income after the reclassification. a. $25,000 b. $100,000 c. $125,000 d. $225,000 e. None of the above
None

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