general account Bob is a builder who operates his business as a sole trader. Heundertook work for Abode Homes Pty Ltd 10 months ago for which hehas not been paid the $80000 he is owed. He has filed an action incourt against Abode Homes Pty Ltd but has now been told thecompany is in receivership. Explain to Bob what this means and howit may affect his claim for payment

When a company like Abode Homes Pty Ltd goes into receivership, it means that a receiver has been…

Answered: Bob is a builder who operates his…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 35P

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Similar questions

Mohammed is in serious financial difficulty and is unable to meet current unsecured obligations of $20,000 to some 14 creditors who are demanding immediate payment. Mohammed owes Aminu $5,000, and Aminu has decided to file an involuntary petition against Mohammed. Which of the following is necessary for Aminu? Aminu must be joined by at least two other creditors. Mohammed must have commited a fraudulent act within one year of the filing. Aminu must allege and subsequently establish that Mohammed's liabilities exceed its assets upon fair valuation. Aminu must be a secured creditor.
Haresh
Jessica sold goods to Stacy for $2,500 and retained a security interest in them. Two months later, Stacy filed a voluntary petition in bankruptcy. At this time, Stacy still owed Jessica $2,000 for the purchase price of the goods, the value of which was $1,500. a. May the trustee invalidate Jessica’s security interest? If so, under what provision? b. If the security interest is invalidated, what is Jessica’s status in the bankruptcy proceeding? c. If the security interest is not invalidated, what is Jessica’s status in the bankruptcy proceeding?
Quince owns a used-car lot where Ray works as a salesperson. Quince tells Ray not to make any warranties for the cars. To make a sale to Sylvia, however, Ray adds a 50,000-mile warranty. Later, Sylvia sues Quince for breach of warranty. Quince may hold Ray liable for any damages he must pay to Sylvia under which remedy: a. indemnification b. avoidance c. constructive trust d. accounting
Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500? (a) Loss of $500. (b) Gain of $4,000. (c) Gain of $4,500 (d) Gain of $5,000.
On July 24 of the current year, Sam Smith was involved in an accident with his business use automobile. Sam had purchased the car for 30,000. The automobile had a fair market value of 20,000 before the accident and 8,000 immediately after the accident. Sam has taken 20,000 of depreciation on the car. The car is insured for the fair market value of any loss. Because of Sams history, he is afraid that if he submits a claim, his policy will be canceled. Therefore, he is considering not filing a claim. Sam believes that the tax loss deduction will help mitigate the loss of the insurance reimbursement. Sams current marginal tax rate is 35%. Write a letter to Sam that contains your advice with respect to the tax and cash flow consequences of filing versus not filing a claim for the insurance reimbursement for the damage to his car. Also prepare a memo for the tax files. Sams address is 450 Colonels Way, Warrensburg, MO 64093.
George owed Keith $800 on a personal loan. Neither the amount of the debt nor George’s liability to pay the $800 was disputed. Keith had also rendered services as a carpenter to George without any agreement as to the price to be paid. When the work was completed, an honest and reasonable difference of opinion developed between George and Keith with respect to the value of Keith’s services. Upon receiving from Keith a bill of $600 for the carpentry services, George mailed in a properly stamped and addressed envelope his check for $800 to Keith. In an accompanying letter, George stated that the enclosed check was in full settlement of both claims. Keith indorsed and cashed the check. Thereafter, Keith unsuccessfully sought to collect from George an alleged unpaid balance of $600. May Keith recover the $600 from George?
If BrainTrain and Natasha had executed a written contract which contained a liquidated damages clause for $200 in the event that BrainTrain breached, and assuming BrainTrain admits to a breach, would that clause be upheld in court? Select Correct Answer a) Yes, it is reasonable and fair. b) No, in this case, actual damages can be easily determined. c) No, the amount is too low for the type of harm she suffered.
Larry leased his building to Terry to conduct a hotel business. The lease requires Terryto repair any damage to the building at the end of the lease. Terry fails to repair damageto the walls of the premises and instead pays Larry a sum of $2,000 for the damage.Advise Larry on the tax treatment of this payment.Suggested Solution Larry has received a one-off lump sum payment of $2,000 after the lease agreement hasended. It is, therefore, likely that the amount would not exhibit the characteristics ofordinary income under s 6-5 ITAA97. However, s 15-25 ITAA97 includes, in a lessor’sassessable income, amounts that are received from an entity (eg a lessee) for failing tocomply with a lease obligation to repair premises that have been used by the entity forincome-producing purposes and that are not assessable as ordinary income under s 6-5.The amount of $2,000 would therefore be assessable to Larry as statutory income unders 15-25 ITAA97.
This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes. (Leave no answers blank. Enter zero if applicable.) %3D b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method? Deductible amount
On June 2, 2020, Sam's Auto Sales sold Jim a used car on account for $20,000. Sam's Auto Sales uses the accrual method. In 2021, when the balance due on the account was $6,000, Jim filed for bankruptcy. Sam was notified that he could not expect to receive any of the amount owed to him. In 2023 final settlement was made and Sam received $2,000. How much bad debt loss can Sam deduct on his tax return in 2021? options: a. $0 b. $6,000 c. $4,000 d. $12,000
Peter Diamond owed Carter $500,000 secured by a first mortgage on Diamond’s plant and land. Stephens was a surety on this obligation in the amount of $250,000. After Diamond defaulted on the debt, Carter demanded and received payment of $250,000 from Stephens. Carter then foreclosed upon the mortgage and sold the property for $375,000. What rights, if any, does Stephens have in the proceeds from the sale of the property?

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