In 2014,Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name.They were thinking of incorporating if that would lower their total tax liability.The Koehlers expected the company to earn $100,000 before taxes next year.They planned to take out salaries of $45,000,and to reinvest the rest in the business.Their personal deductions total $8,150 and they will file a joint return for their personal income. (1)What is their expected total tax liability as a proprietorship? (2)As a corporation? (3)Based on current taxes,should they incorporate? A) $23,304.50;$14,675.00;Yes B) $14,675.00;$13,427.50;Yes C) $23,304.50;$13,427.50;Yes D) $15,212.50;$23,450.00;No E) $20,778.00;$23,450.00;No

In 2014,Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name.They were thinking of incorporating if that would lower their total tax liability.The Koehlers expected the company to earn $100,000 before taxes next year.They planned to take out salaries of $45,000,and to reinvest the rest in the business.Their personal deductions total $8,150 and they will file a joint return for their personal income. (1)What is their expected total tax liability as a proprietorship? (2)As a corporation? (3)Based on current taxes,should they incorporate? A) $23,304.50;$14,675.00;Yes B) $14,675.00;$13,427.50;Yes C) $23,304.50;$13,427.50;Yes D) $15,212.50;$23,450.00;No E) $20,778.00;$23,450.00;No

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

I need help
Selerino and Maria are married and file their taxes jointly. Selerino earned $82,000 in wages last year, while Maria earned $130,000. They also earned $2,150 in interest from their savings account. Selerino and Maria contributed $5600 to their tax-deferred savings account, and had $21,350 in itemized deductions. They also had $3600 in tax credits and $26,540 withheld. 1. What is their gross income? Show how to calculate this 2. What is their adjusted gross income? Show how to calculate this
Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:● Utilities: $2,000● Office Rent: $14,000● Self-Employment Tax: $5,000● Salary for her secretary: $20,000● Fines/Penalties: $8,000● Payroll Taxes (Employer Portion): $1,000● Business Meals: $2,000● Bribe to police officer to forgive parking violation $1,500Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income. Also, during the year a tornado damaged the roof of their personal…
Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) d. What is Devon's tax basis in the stock he receives in return for his contribution of services to the corporation? Tax basis
Lena is the sole shareholder and president of Gold Corporation, which is a C Corporation. She feels that she can justify paying herself a $50,000 bonus this year because of her excellent performance for the company. However, rather than a bonus, she considers having Gold pay her a $50,000 dividend. She believes this would be preferable because it will be taxed at only 15% as a “qualified dividend” instead of being taxed at her marginal income tax rate of 35% as a bonus. Assuming that Gold Corporation is in the 21% federal tax bracket, how much federal income tax could Lena save by taking the bonus?Given that Lena owns 100% of Gold Corporation you should analyze this decision from both the corporation and individual tax perspectives (an “integrated” analysis). You can ignore any state or social security tax considerations. Reminder: dividends paid by a C Corporation are nondeductible for federal income tax purposes.
lois bought a house in july 2009 for $200000 and moved in immediately. in july 2012, she rented it out as she was sent overseas ny her employer. at that time, the house was valued at $350000. she sold it in july of the current tax year for $360000. Calculate Bunny’s net capital gain/(loss) for the current tax year, indicating where appropriate which element of the cost base is applicable for each outlay. Support your answer with income tax legislation where necessary
Please answer
Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate schedule.) a) Using the married-joint tax brackets and corporate tax rate, find out how much current tax this strategy could save Orie and Jane. b) How much income should be left in the corporation?
In each of February 2005, 2006 and 2007, Lyle made an annual contribution of $6,750 into a spousal RRSP. He did not make any RRSP contributions in 2008 or 2009 because of tight finances. Lillian did not make any contributions. In April 2009, Lyle's spouse, Lillian, withdrew $20,000 from a spousal RRSP under which she is the annuitant and Lyle is the contributor. What income tax consequences are associated with the $20,000 withdrawal? $20,000 is taxable to Lillian $20,000 is taxable to Lyle $6,750 is taxable to Lillian and $13,250 is taxable to Lyle $6,750 is taxable to Lyle and $13,250 is taxable to Lillian DATA SHEET OAS recovery tax 2017 income $74,788 - 121,314 OAS recovery tax 2018 income $75,910 123,386 2016 Money Purchase Limit $26,010 2017 Money Purchase Limit S26,230 2021 RRSP$ Limit $27,830 2022 RRSP S Limit $29,210 2018 OAS $586.66 2017 OAS $583.74 2018 CPP $1.134 17
The year before last, Victor earned $85,000 from his retail management position, and Maria began working full-time and earned $52,000 as a medical technician. After they took the standard deduction and claimed four exemptions (themselves plus their two children), their federal income tax liability was about $20,000. After being convinced by friends that they were paying too much in taxes, the cou- ple vowed to try to never again pay that much. Therefore, the Hernandezes embarked on a yearlong effort to reduce their income tax liability. This year they tracked all of their possible itemized deductions, and both made contribu- tions to retirement plans at their places of employment. A.) Calculate the Hernandezes’ income tax liability for this year as a joint return (using Table 4-2) given the following information: gross salary income (Victor, $85,000; Maria, $52,000); state income tax refund ($400); interest on checking and savings accounts ($250); holiday bonus from Maria’s employer…
Charles and Joan Thompson file a joint return. In 2022, they had taxable income of $98,800 and paid tax of $13,615. Charles is an advertising executive, and Joan is a college professor. During the fall 2023 semester, Joan is planning to take a leave of absence without pay. The Thompsons expect their taxable income to drop to $80,000 in 2023. They expect their 2023 tax liability will be $9, 323, which will be the approximate amount of their withholding. Joan anticipates that she will work on academic research during the fall semester. During September, Joan decides to perform consulting services for some local businesses. Charles and Joan had not anticipated this development. Joan is paid a total of $ 40,000 during October, November, and December for her work. Use the appropriate Tax Rate Schedules. Required: What estimated tax payments are Charles and Joan required to make, if any, for tax year 2023? Note: Round your intermediate calculations and final answer to the nearest dollar…
Harry, Hermione, and Ron formed an S corporation called Bumblebore. Harry and Hermione both contributed cash of $36,700 to get things started. Ron was a bit short on cash but had a parcel of land valued at $85,700 (basis of $73,400) that he decided to contribute. The land was encumbered by a $49,000 mortgage. What tax bases will each of the three have in his or her stock of Bumblebore?