On January 1 of the current year, Scott borrows $80,000, pledging the assets of his business as collateral. He immediately deposits the money in aninterest-bearing checking account. Scott already had $20,000 in this account. On April 1, Scott invests $75,000 in a limited real estate partnership. OnJuly 1, he buys a new ski boat for $12,000. On August 1, he makes a $10,000 capital contribution to his unincorporated business. Scott repays$50,000 of the loan on November 30 of the current year.RequirementClassify Scott's interest expense for the year.(Enter the dates in chronological order. Round the percentages to two decimal places (XX.XX%). If an input field is not used in the table leave the inputfield empty; do not select a label or enter a zero.)FromΤοCategory of interestPercentage%%%%%%%do do do do do do do do

Approach to solving the question: 1. January 1- March 31:With his company's assets pledged as…

Answered: On January 1 of the current year, Scott…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 68P

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Carlos opens a dry cleaning store during the year. He invests 30,000 of his own money and borrows 60,000 from a local bank. He uses 40,000 of the loan to buy a building and the remaining 20,000 for equipment. During the first year, the store has a loss of 24,000. How much of the loss can Carlos deduct if the loan from the bank is nonrecourse? How much does Carlos have at risk at the end of the first year?
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John deposits $2,000 in the first year, $800 in the second year and $600 in the third year to WMW Bank with an interest rate of 12%. Sky deposits $3,800 in the third year to the same bank. At the end of the fifth year, Sky and John have the same amount of money in their accounts. What is the interest rate for Kuzey?
Tom and Davidson go into business together as a partnership selling computer software through the Internet. On January 1 they each put $6,000 as capital and this goes into their local bank account for the company. They bought computer equipment for $10,000 in which they paid by check and set up for business in Davidson's dad's basement. The cost of computer equipment will be amortized over the next three years with a disposable value of $1000. Davidson's dad has agreed to let them operate out of his basement if they pay him a rent of 10% of their annual profit or $1,200 per year whichever is greater. At the end of the first month of business, they have made no sales and incurred no expenses other than the amortization rate of the computer equipment and the rent which is owed to Davidson's dad. At the end of January, what is the accounting equation (assets, liabilities and equity)
Tom & Dick go into business together as partnership, selling computer software through the internet. On January 1, they each put in $6,000 as capital, and this goes into the Tom&Dick account at their local bank. They buy computer equipment for $10,000 (paid by cheque) and set up for business in Dick’s dad’s basement. The cost of the computer equipment will be amortized over the next three years, with a disposal value of $1,000. Dick’s dad has agreed to let them operate out of his basement if they pay him a rent of 10% of their annual profit, or $1,200 per year, whichever is greater. At this point the total asset is: A. $6,000.00 B. $12,000.00 C. $10,800.00 D. $22,000.00 E. There is no possible answer
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Last year Nate opened a savings account with a deposit of $17,250. The account was in the name of Nate and Derrick, joint tenancy with the right of survivorship. Derrick did not contribute to the account, but this year he withdrew $5,750. Required: a-1. Has Nate made a complete gift? a-2. What is the amount of the complete gift, if any, and when was the gift made? Complete this question by entering your answers in the tabs below. Req A1 Req A2 What is the amount of the complete gift, if any, and when was the gift made? Amount of complete gift At the time of withdrawal
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A student saved $3,000 per year from 1986 to 2001 (15 years) in an account with 7% interest. He stopped depositing money after year 2001, but the money was kept in the same account earning interest. In 2007 he withdrew $15,000 for down payment toward purchase of a new house. In 2012 he received an inheritance as a single payment of $30,000, which he deposited in the same account. What is the current balance of the account (2021)?
Plainwell Ice Cream Corporation (Plainwell), a premium ice cream manufacturer, has had a very profitable year. To share its profits with its two shareholders, Waffle Cone Corporation and Luis, it distributes cash of $200,000 to Waffle Cone and real estate worth $300,000 (adjusted basis of $20,000) to Luis (a married taxpayer filing a joint return). The real estate is subject to a mortgage of $100,000, which Luis assumes. The distribution is made on December 31, Plainwell's year-end. Plainwell has had both good and bad years in the past. More often than not, however, it has lost money. Despite this year's record profits, the GAAP-based balance sheet for Plainwell indicates a year-end deficit in retained earnings. Consequently, the distribution of cash and land is treated as a liquidating distribution for financial reporting purposes, resulting in a reduction of Plainwell's paid-in capital account. The tax consequences of the distributions to the corporation and its shareholders depend…

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