Problem 12-05 (Algo) [LO 12-3] Ms. Singh, who is in the 37 percent tax bracket, owns a residential apartment building that generates $104,000 annual taxable income. She plans to create a family partnership by giving each of her two children a 20 percent equity interest in the building. (She will retain a 60 percent interest.) Ms. Singh will manage the building, and value of her services is $24,000 per year. Required: If Ms. Singh's children are in the 12 percent tax bracket, compute the tax savings from this income-shifting arrangement. (ignore any payroll tax consequences.) Tax savings from this income-shifting arrangement

Problem 12-05 (Algo) [LO 12-3] Ms. Singh, who is in the 37 percent tax bracket, owns a residential apartment building that generates $104,000 annual taxable income. She plans to create a family partnership by giving each of her two children a 20 percent equity interest in the building. (She will retain a 60 percent interest.) Ms. Singh will manage the building, and value of her services is $24,000 per year. Required: If Ms. Singh's children are in the 12 percent tax bracket, compute the tax savings from this income-shifting arrangement. (ignore any payroll tax consequences.) Tax savings from this income-shifting arrangement

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter14: Property Transactions: Determination Of Gain Or Loss And Basis Considerations

Section: Chapter Questions

Problem 2DQ

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32. LO.3, 4 For tax year 2023, determine the number of dependents in each of the following independent situations: a. Ben and Molly (ages 48 and 46, respectively) are married and furnish more than 50% of the support of their two children, Libby (age 18) and Sam (age 24). During the year, Libby earns $4,500 providing transportation for older persons with disabilities, and Sam receives a $5,000 scholarship for tuition at the law school he attends. b. Audry (age 45) was divorced this year. She maintains a household in which she, her ex-husband (Clint), and his mother (Olive) live and furnishes more than 50% of their support. Olive is age 91 and blind. C. d. Crystal, age 45, furnishes more than 50% of the support of her married son, Andy (age 18), and his wife, Paige (age 19), who live with her. During the year, Andy earned $9,600 from a part-time job. All parties live in Iowa (a common law state). Assume the same facts as in part (c), except that all parties live in Washington (a…
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Q3 Ms. Prince wants to create a scholarship in honor of her parents at the law school from which she received her degree. She could endow the scholarship with $557,500 cash or with $557,500 worth of marketable securities with a cost basis of $334,500. Assume the taxable year is 2021. Required: If her AGI is $3.8 million, compute the after-tax cost of the two endowment options. Use Individual Tax Rate Schedules and Tax rates for capital gains and qualified dividends. (Enter your answers in dollars not in millions of dollars.) After-tax cost: Cash /Securities
Problem 9-19 (LO. 2, 3, 4, 5) Taylor, age 18, is a dependent of her parents. For 2023, she has the following income: $6,250 of wages from a summer job, $800 of interest from a money market account, and $300 of interest from City of Chicago bonds. If an amount is zero, enter "0". Click here to access the 2023 tax rate schedule. a. Determine the following: Taylor's standard deduction for 2023 is $ Taylor's taxable income for 2023 is s b. Compute Taylor's "net unearned income for the purpose of the kiddie tax. Compute Taylor's income tax. [Her parents file a joint return and have taxable income of $135,000 (no dividends or capital gains).]
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Problem 18-35 (LO. 5) Using property she inherited, Lei makes a 2022 gift of $16,200,000 to her adult daughter, Doris. Neither Lei nor her spouse, Greg, have made any prior taxable gifts. Assuming that a flat 40% tax rate applies, determine the Federal gift tax liability if (a) the election to split gifts is not made and (b) the election to split gifts is made. (c) What are the tax savings from making the election? The unified transfer tax exclusion amount for 2022 is $12,060,000. If an amount is zero, enter "0". a. If the election to split gifts is not made, the taxable gift is $ b. If the election to split gifts is made, then the taxable gift from Lei is $ due from Lei is $ and from Greg is $ c. The tax savings from making the election is $ and gift tax due on the gift is $ and from Greg is $ . Gift tax
Discussion Question 12-5 (Algorithmic) (LO. 4, 7) Ava and her husband, Leo, file a joint return and are in the 24% Federal income tax bracket in 2020. Ava's salary is $102,050. Her employer offers a child and dependent care reimbursement plan that allows up to $4,750 of qualifying expenses to be reimbursed in exchange for a $4,750 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care that costs $5,225 each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Click to view Percentage Credit based on Adjusted Gross Income. a. If Ava and Leo take advantage of the plan, they would is excluded from а. save income taxes because the reimbursement of child are expenses v gross income.…
Problem 8-64 (LO 8-3) (Algo) Brooke, a single taxpayer, works for Company A for all of 2022, earning a salary of $53,000. Note: Round your intermediate and final answers to the nearest whole dollar amount. Required: a. What is her FICA tax obligation for the year? b. Assume Brooke works for Company A for half of 2022, earning $53,000 in salary, and she works for Company B for the second hal- of 2022, earning $103,000 in salary. What is Brooke's FICA tax obligation for the year?
Exercise 13-20 (Algorithmic) (LO. 4, 8) Ava and her husband, Leo, file a joint return and are in the 24% tax bracket in 2021. Ava's employer offers a child and dependent care reimbursement plan that allows up to $4,300 of qualifying expenses to be reimbursed in exchange for a $4,300 reduction in the employee's salary (Ava's salary is $93,850). Because Ava and Leo have two minor children requiring child care that costs $4,730 each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Click to view Percentage Credit based on Adjusted Gross Income. a. If Ava and Leo take advantage of the plan, they would is excluded from X gross income. The income tax savings 1,032 .In addition, Ava will save $ save income taxes because the…
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