During 2023, Babco Corporation purchased a car for its employee Andrew, at a cost of $33036, including all taxes. Babcopaid $2371 for the operating costs of the car during 2023. Andrew used the car for 10 months during the year andduring the months of non-use, it was returned to Babco's premises. During the year, he drove the car a total of 19492kilometers of which 13505 kilometers were for personal travel and the remainder was for employment-related use.Andrew reimbursed Babco $130 per month for the use of the car. Calculate the taxable benefit arising from the use ofthe car that Andrew must include in his employment income in 2023.

To calculate the taxable benefit arising from the use of the car that Andrew must include in his…

Answered: During 2023, Babco Corporation…

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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Bob the Builder purchased a land and building in Year 6 for $4,000,000. $1.6 million of the purchase price was allocated to the land, and the balance to the building. At the time of the purchase it was estimated that the building would have a useful life of 40 years but no residual value. In Year 17, Bob exchanged the land and building for a piece of undeveloped land. Bob also received $100,000 cash to make up the difference in the fair values of the assets exchanged. The fair market value of the assets given up was estimated to be $6.2 million; the fair value of the land to be received was $6.1 million. Bob depreciates his buildings using the straight-line method. Bob records a full year of depreciation expense in the year of acquisition and no depreciation expense in the year of disposal. (1) Prepare the journal entry to record the exchange of the asset in Year 17 for Bob the Builder, assuming that the transaction has commercial substance (general case). (2) Prepare the journal entry…
On April 30, 2020, Floyd purchased and placed in service a new $30,000 car. The car was used 60% for business, 20% for production of income, and 20% for personal use in 2020. In 2021, the usage changed to 40% for business, 30% for production of income, and 30% for personal use. Floyd did not elect immediate expensing under 6 179. He elects not to take additional first-year depreciation. If required, round yaur answers to the nearest dollar. Click here to access the cost recovery tables of the textbook. Assume the following luxury automobile limitations: year 1: $10,100; year 2: $16,100. a. The cost recovery deduction taken in 2020 was s 4,800 b. The cost recovery deduction for 2021 is s 4,100 c. The cost recovery recapture, if any, in 2021 is s 5,600
Masoud drove his vehicle exclusively for ride-hailing in 2022. He drove 8,354 total miles, 4,300 from January 1 to June 30 and the remainder (4,054) after that. His actual expenses were: Gas and oil $2,150 Auto insurance $1,350 New tires $500 Registration fees $450 Depreciation $1,200 New brakes $300 Speeding ticket $250 What is Masoud's allowable vehicle expense deduction?
On May 28, 2020, Mary purchased and placed in service a new $60,000 car. The car was used 60% for business, 20% for production of income, and 20% for personal use in 2020. In 2021, the usage changed to 40% for business, 30% for production of income, and 30% for personal use. Mary did not elect immediate expensing under § 179. She did not claim any available additional first-year depreciation. Compute Mary's cost recovery deduction for 2020 and 2021 and any cost recovery recapture in 2021.
Greene operates a parking lot that yielded net income of $13,000 during the current year. The only other transactions that Mr. Greene had during the year were: 1) a gain of $16,000 on the sale of some Dell Corporation stock that he bought two years ago; 2) a loss of $10,000 on the sale of one acre of the land used in his parking lot business; 3) a gain of $4,000 on the sale of half an acre of the land used in his parking lot business. All of the land used in his parking lot operations was purchased seven years ago. Mr. Grenee's net capital gain from sale or exchange of capital assets for the current year is 20,000 16,000 10,000 15,000 Please note answer is not 10,000
Jaylee purchased a large piece of equipment for their business costing $50,000 with a life of 10 years. The equipment qualifies for regular depreciation, bonus depreciation, and Section 179. Explain to Jaylee these cost recovery methods and what the deduction would be for the first, second, and third years for the equipment for each of these methods.
During the current year, Hom donates a sculpture that cost $1,000 to a museum for exhibition. The sculpture's fair market value was $1,700 on the date of the donation, and Hom's adjusted gross income is $40,000. Assume Hom held the sculpture for 4 months and the $700 ($1,700 − $1,000) of appreciation is a short-term capital gain. Calculate the amount of his itemized deduction for the contribution. Assume Hom held the sculpture for 2 years and the $700 appreciation is a long-term capital gain. Calculate the amount of his itemized deduction for the contribution.
On July 1, 2018, Brent purchases a new automobile for $40,000. He uses the car 80% for business and drives the car for business purposes as follows: 8,000 miles in 2018, 19,000 miles in 2019, 20,000 miles in 2020, and 15,000 miles in 2021. Brent uses the actual cost method. [Assume that no § 179 expensing is claimed and that 200% declining-balance cost recovery with the half-year convention is used. The recovery limitation for an auto placed in service in 2018 is as follows: $10,000 (first year), $16,000 (second year), $9,600 (third year), and $5,760 (fourth year).] a. Compute his depreciation deductions for the years 2018, 2019, 2020, and 2021. What is Brent's adjusted basis in the auto on January 1, 2022?
On January 1, 2022, Aniyah, a sole proprietor, purchased for use in her business a used production machine (7-year property) at a cost of $4,000. Aniyah does not purchase any other property during 2022 and has net income from her business of $80,000. If the standard recovery period table would allow $572 of depreciation expense on the $4,000 of equipment purchased in 2022, what is Aniyah’s maximum depreciation deduction including the Section 179 election to expense (but not bonus depreciation) for 2022? a. $4,000 b. $2,000 c. $572 d. $800
Please show the works
Margaret Lindley paid $15,190 of interest on her $301,900 acquisition debt for her home (fair market value of $501,900), $4,190 of interest on her $30,190 home-equity debt used to buy a new boat and car, $1,190 of credit card interest, and $3,190 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,190 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year? $23,760 $22,570 $19,380 $18,380 None of the choices are correct.
Nancy purchased a projector screen on July 15, 2019, for $1,200. The screen was used 70% of the time in her business and the rest of the time her children used the screen to watch movies. In 2019, the computer was used 40% for business and 60% for personal use. What are the cost recovery deductions for 2019 and 2020? (No §179 or bonus). Is there any recapture of depreciation in 2020?

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