C23B2 Kevin, a calendar-year taxpayer, utilizes the cash method of accounting for his small business, which provides various consulting3 expertise to the railroad industry. At the end of the year, he spent significant time working on a consulting project for Regional Railroad's4 light rail replacement initiative. Although the project is not done, Regional Railroad's project manager knows Kevin spent a significant5 amount of time and wants to get Kevin paid before year-end. As such, he told Kevin he may issue a progress billing for time incurred to6 date. However, Kevin expects the project to wrap up within the first week of the new year, and is concerned of the tax implications ofincluding the income on his current year tax return. Kevin has asked his nephew, a tax consultant, for some advice. Kevin has spent 120hours on the project to date with a billing rate of $100/hour; his after-tax rate of return is 12% and his marginal tax rate is 28%.78X✓ fx =PV(0.12,1,0,-3360,0)91011 Required:12 1. Prepare a Present Value Comparison using PV formulas1314 (HINT: Do not enter an amount for PMT in the PV formula as there are no cash flows involved with this tax liability; instead, use FV)15161718 Time Incurred (hours)19 Hourly Billing Rate20 Taxable IncomeDescription21 Marginal Tax Rate22 Tax Liability23Present Value Tax LiabilityPresent Value ComparisonOption 1:Option 2:Receive Payment Before Receive Payment After12/3112/31120.00$100.00$12,000.0028%$3,360.00$3,360.00120.00$100.00$12,000.00E28%$3,360.00$3,000.00

The tax liability represents the taxes to be paid. The time value of money refers to the concept of…

Answered: E 2 Kevin, a calendar-year taxpayer,…

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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Jasmine is single and turned 72 years old on October 1, 2023. • Jasmine worked as a public historian at the local library and earned wages of $32,000. Jasmine also received Social Security benefits of $16,500. She received a taxable pension of $14,000. ● ● ● • She retired from her previous job on October 30, 2020. During her career she contributed pretax dollars to a qualified 401(k) retirement plan through her employer. Jasmine cannot be claimed as a dependent by another taxpayer. Jasmine is a U.S. citizen with a valid Social Security number. Basic Scenario 5: Retest Questions 9. Jasmine does not qualify for the Earned Income Tax Credit because she does not meet the age requirement. True b. False 10. When must Jasmine begin taking her required minimum distribution? a. April 1 of the calendar year following the year she reaches age 70 1/2. (b. April 1 of the calendar year following the year she reaches age 73. c. April 1 of the calendar year following the year she retired. d. Never.…
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Mr. O's employer requires him to use his own vehicle for work and pay all of the vehicle's operating costs. Mr. O. is not paid commissions. Mr. O. purchased a vehicle on July 1, 2020 for $37,290 including HST. Mr. O. drove this vehicle 25,000 kilometers, of which 15,000 were for work. The capital cost allowance for 2020 is $15,255. During the 6 months he owned vehicle he paid: bank loan interest $1,950 gas and oil maintenance insurance 1,840 300 1,400 100 licence plates Required: Calculate the amount Mr. O. can deduct from employment income. Show all calculations.
John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2021, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. Assume the Fergusons did not receive an advance payment for the 2021 individual recovery credit because they are not eligible for the credit. Use Exhibit 8-10, Tax Rate Schedule Dividends and Capital Gains Tax Rates. 2021 AMT exemption for reference. The Fergusons reported making the following payments during the year: • State income taxes of $4,400. Federal tax…
Sandy and John Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2022, Sandy worked as a computer technician at a local university earning a salary of $152,100, and John worked part time as a receptionist for a law firm earning a salary of $29,100. Sandy also does some Web design work on the side and reported revenues of $4,100 and associated expenses of $800. The Fergusons received $820 in qualified dividends and a $205 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. Use Exhibit 8-10, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2022 AMT exemption for reference. The Fergusons reported making the following payments during the year: State income taxes of $4,425. Federal tax withholding of $21,000. Alimony payments to Sandy's former spouse of $10,050 (divorced 12/31/2014). Child support payments for Sandy's child with…
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Melanie is employed full-time as an accountant for a national hardware chain. She recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2019 are as follows: Real property taxes Interest on home mortgage Operating expenses of home $3,600 3,800 900 Melanie's residence cost $350,000 (excluding land) and has living space of 2,000 square feet, of which 20% (400 square feet) is devoted to business. The office was placed in service in February 2018, and under the Regular Method, Melanie had an unused office in the home deduction of $800 for 2018. Assume there is sufficient net income from her consulting practice. Click here to access the depreciation table. Round deprecation to the nearest dollar. a. What amount can Melanie claim this year for her office in the home deduction under the Regular Method? $ 3,455 X b. What is Melanie's office…
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