Answered: dvise Michelle of the income tax…

Business

Accounting

dvise Michelle of the income tax consequences on receipt of $210,000 from Alex.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: During 2020, Rick and his wife, Sara, had the following items of income and expense to report:…

A: Adjusted Gross Income (AGI): Adjusted gross income is the amount on which the tax liability of the…

Q: In the year 2023, with the social security wage cap set at $160,200, Alex obtained a $100,000 income…

A: Self-employed tax is a tax that self-employed individuals must pay to fund their social security and…

Q: Mary Jane earns $4,000,000.00 per annum for her salary. How much would be her taxable income for…

A: To calculate Mary Jane's taxable income for 2024, we need to consider her annual salary, any…

Q: On 1 July 2019 Mary acquired a little boat for $12343. It was for her personal use. Mary borrowed…

A: Capital gain/loss refers to any gain or loss on sale a capital asset. A qualifying asset is an asset…

Q: What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment…

A: An American opportunity tax credit is the credit which is given to the taxpayer for the expenses…

Q: The Net Income of Mr. Richard was £130,000 during the tax year 2019-2020. He travelled 10,000 miles…

A: Tax means the mandatory payment made by assesse to the government without expecting anything…

Q: Question 8: Gift aid donation scheme. Brenda has employment income of £55,000 each year and makes a…

A: The question is given to compute the income tax liability. Tax liability: Tax liability refers to…

Q: Ann Moore receives a $1,000 monthly payment from her former husband Bill. Assume the taxable year is…

A: Adjusted gross income is the amount on which the tax liability of the taxpayer is determined after…

Q: During 2020, Stephanie received $16,000 in wages, $3,500 in unemployment benefits, and $500 in…

A: The business income for net operating income (NOI) would include only the income related to the…

Q: Please answer with explanation. I will really upvote.

A: INTRODUCTION No - Calc : The final two quarterly installments are based on the tax paid in the year…

Q: Katherine's only income for 2020 consisted of 60000 in wages and 2000 in interest income. She is 50…

A: Individual Retirement Account (IRA) is defined as an account in which individuals invest their…

Q: Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2022). In 2022, her…

A: The Simplified Employee Pension (SEP) IRA is a retirement plan that allows self-employed individuals…

Q: ola, age 64 began receiving $1,200 as a monthly annuity in 2019 when her husband died. She received…

A: The question is based on the concept of financial accounting.

Q: Myers, who is single, has compensation income of $66,600 in 2020. He is an active participant in his…

A: Answer:- Traditional IRA [Individual Retirement Arrangement] is a qualified saving plan for…

Q: a. How much can Ashley contribute to her Roth IRA if they file a joint return?

A: The contribution to the Roth IRA is directly dependent upon the income earned during the year and…

Q: Amelia receives her monthly Telstra mobile phone bill on 27 June 2023. Assume that Amelia uses the…

A: Amelia incurred the phone expense on the 27th of June 2023 because that's the date she received her…

Q: NeNe, a 60-year-old-widower, has the following taxable income in 2022: Interest income: $3,200 Form…

A: The question is asking for the maximum amount that NeNe can contribute to her traditional Individual…

Q: What is Mohamed's taxable income for 2019, note that the personal allowance is £10,600,

A: The final amount of income over which the tax rate is charged for the tax liability is known as…

Q: Carla earns 137,100 from January through November 2020, before resigning to work for a new employer…

A: Rules: 1. 6.2% Social Security tax, withheld from the first $137,700 an employee makes in 2020 2.…

Q: Mr. Daniel had an Total Net Income of £104,000 in 2019-2020 tax year. His personal pension…

A: Adjusted net income is the total taxable income before deducting personal allowances less gross…

Q: In 2018 Freddie, a cash basis taxpayer, borrowed an amount from Roger amounting to 13,000 pesos…

A: Interest is a amount which is paid by a borrower to the person from the money has been taken by him…

Q: The maximum amount of student loan interest that Abigayle and Jon can deduct on their return is

A: The maximum amount of student loan interest that can be deducted is $2,500. However, the deduction…

Q: Partner Z (a calendar-year, cash basis taxpayer) performs services for the XYZ partnership (a FYE…

A: Accrual basis taxpayers are those taxpayers which evaluate the income when earned actually or become…

Q: Jeri purchased an annuity contract for $18,600 ($50/month for 15.5 years). The contract began paying…

A: Annuities are the uniform annual payments that are being paid over the period of time of annuity but…

Q: Amelia receives her monthly Telstra mobile phone bill on 27 June 2023. Assume that Amelia uses the…

A: Accrual accounting is a method of accounting that records financial transactions at the time they…

Q: In 2022, Elaine paid $2,280 of tuition and $740 for books for her dependent son to attend State…

A: Tax is the amount that the people pays according to their income to the concerned government entity.…

Q: akes out a $200,000 home equity loan to put an addition on the main home. Both loans are secured by…

A: Income interest is a borrowing expenditure that may be deducted from taxable income by filing a…

Q: In 2021, Madeline earns $51,000 from her regular job. She also earns $2,000 in ordinary dividends…

A: There are 5 types of filing status prescribed by the IRS:- 1. Single 2. Married filing jointly 3.…

Q: Haresh

Q: Lawan has been making payments on her federal student loan on an income-based repayment plan for the…

A: Tax is a charge which is charged on the taxable income a taxpayer. There are various ways a taxpayer…

Q: In 2023, Bianca earned a salary of $164,000 from her employer. If required, round your answers to…

A: Payroll taxes refer to those taxes paid by both employer and employee in order to fund the employee…

Q: 019/20, Emmanuel receives an employment income of £180,000 from ABC Ltd. He made a gross gift aid…

A: In the given situation, Emmanuel receives income of 180,000 from ABC Ltd. He made a gross aid…

Q: In 2022, Elaine paid $2,800 of tuition and $600 for books for her dependent son to attend State…

A: Families who provide financial assistance to their children or dependents for their first four years…

Q: Joanne Keating, who is paid S2,200.00 bi-weekly, also receives the following in addition to her…

A: Insurance offers a security from any kind of miss happening in future by offering a claim offered to…

Q: Jackson and Ashley Turner (both 45 years old) are married and want to contribute to a Roth IRA for…

A: Roth IRA stands for Individual Retirement Account in which the person contributes after tax dollars.…

Q: Greg Grove pays $50,000 interest in 2020 on his mortgage on his principal residence. It has an…

A: Answer: When any interest has been paid on mortgage of home, then maximum deduction that is allowed…

Q: On January 1, 2023, Mr. Packard receives a $135,000 loan from his employer to assist him in…

A: The objective of the question is to calculate the amount that Mr. Packard is required to add to his…

Q: Devine purchased an annuity of N$1 500 per month from an insurer on 31 May 2019. The cash…

A: Answer: As per rules if taxpayer invested in annuity after tax income then amount received of…

Q: please use 2021 tax table Raphael and Martina are engaged and are planning to travel to Las Vegas…

A: Federal Tax Status - Married Filled Jointly If a married couple choose to file a joint return, they…

Q: 6. An employee, who had been with the company for 6 years, passed away on August 31, 2021. She had…

A: a) Calculation of Maximum CPP Contribution for the year: Particulars Amount Maximum Permissible…

Q: Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2022). In 2022, her…

A: For the year 2022, the IRS has set the maximum contribution limit for a 401(k) plan at $20,500 for…

Q: Oscar purchases an annuity in 2000 for $450,000 which will pay him $90,000 a year for life starting…

A: An annuity scheme is just like a retirement scheme in which a person will receive a regular payments…

Q: Sally owns real property for which the annual property taxes are $9,000. She sells the property to…

A: A tax paid on property that is owned by a person, business, or other legal body is known as property…

Q: During the 2019/20 FBT year, Tesla Ltd gave an employee a personal loan of $50,000. The loan existed…

Q: A. William’s basic annual salary is R240 000. He receives an annual bonus of 80% of his basic…

A: A certain percentage of salary of an employee is deducted as pension fund, employer may also…

Question

On 10 September 2021, Michelle purchases a 10-year annuity from the “Retirees Gold Ltd” (RGL). Under the agreement, Michelle pays a lump sum amount of $1 million, and in return RGL would pay her $24,000 per year over and above Michelle’s $1 million investment. On 16 September 2021, Michelle sells the right to receive the annual payments to Alex for $210,000.

Required: Advise Michelle of the income tax consequences on receipt of $210,000 from Alex. Cite relevant legislation and cases in support of your answer.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

On January 1, 2019, Charles Jamison borrows $40,000 from his father to open a business. Charles is the beneficiary of a trust created by his aunt from which he will receive $25,000 on January 1, 2029. He signs an agreement to make this amount payable to his father and, further, to pay his father equal annual amounts from January 1, 2020, to January 1, 2028, inclusive, in retirement of the debt. Interest is 12% per year. What are the annual payments?
Jane received bank interest of £3000 during the tax year 2020/21. Requirement: Calculate Jane’s Income tax liability assuming she also had employment income £29,000 in the tax year 2020/21
Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2023). In 2023, her net Schedule C income was $314,000. This was her only source of income. This year, Rita is considering setting up a retirement plan. What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations? Note: Round your intermediate calculations and final answers to the nearest whole dollar amount. Problem 13-85 Part a (Algo) a. She sets up a SEP IRA. Maximum contribution
Jessica purchased a home on January 1, 2019, for $580,000 by making a down payment of $230,000 and financing the remaining $350,000 with a loan, secured by the residence, at 6 percent. During 2019 and 2020, Jessica made interest-only payments on this loan of $21,000 (each year). On July 1, 2019, when her home was worth $580,000, Jessica borrowed an additional $145,000 secured by the home at an interest rate of 8 percent. During 2019, she made interest-only payments on the second loan in the amount of $5800. During 2020, she made interest-only payments on the second loan in the amount of $11,600. What is the maximum amount of the $32,600 interest expense Jessica paid during 2020 that she may deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.) (Enter only numbers with no dollar signs or other punctuation.)
Barbara purchased a new Honda Clarity electric vehicle in 2019 for $36,000. Her federal tax credit will be:a. $0b. $2,500c. $5,000d. $7,500e. $10,000
n 2021 Betty loaned her son, Juan, $10,000 to help him buy a car. In 2023, before he repaid the $10,000, Betty to Juan that she was "tearing up" the $10,000 note as a graduation present. How should Juan treat the amount forgi O A. taxable income in year of forgiveness B. excludible gift in year of forgiveness OC. taxable income in year of loan O D. excludible gift in year of loan
Lorna Hall’s real estate tax of $2,010.88 was due on December 14, 2019. Lorna lost her job and could not pay her tax bill until February 27, 2020. The penalty for late payment is 612%612% ordinary interest. (Use Days in a year table.)a. What is the penalty Lorna must pay? (Round your answer to the nearest cent.) Penalty Pay b. What is the total amount Lorna must pay on February 27? (Round your answer to the nearest cent.) Total Amount
n 2020, Juergen made after-tax contributions of $24,300 to his employer's qualified plan. In August 2021, he requested a nonperiodic distribution. At that time, his account balance was $78,000 and he received a one-time distribution of $13,000. How much of the distribution is tax-free? $0 $4,050 $11,300 $13,000
Kelsey (age 30) purchased an annuity for $120,00. The annuity will pay her $1,200 per month for life beginning when she turns age 60. At age 60, her life expectancy is 25 years. a. When Kelsey receives the first $1,200 monthly annuity payment, how much will be taxable and how much will be a nontaxable return of basis? b. Kelsey lives to age 92. What is the tax effect of each monthly annuity payment she receives after age 85? c. Instead, Kelsey dies after receiving all of her monthly payments for age 80. What is the amount of her unrecovered basis and how is it treated for tax purposes?
1.
During the 2020 FBT year, Penny borrowed $54683 at 2.5% pa interest from her employer. The loan was to exist for the entire FBT year would be used to pay a deposit on an investment property she was buying. Before Penny could make any repayments on the loan, her employer informed her that she did not have to repay the loan. Required: Calculate the FBT payable by her employer.
Mani