Problem 6: Income Inclusions Ted Crisp reports the following transactions for 2022: • In exchange for providing consulting services Ted entered into an agreement to receive a bag of diamonds with a fair market value of $25,000. The diamonds are delivered to a warehouse in Ted's town on 12/20/2022 but he doesn't pick them up until 01/15/2023. On January 1st, Ted made a loan in the amount of $110,000 to his co- worker Lem so that Lem could purchase Bitcoin. He didn't charge Lem any interest on the loan. The applicable federal funds rate for 2022 was 10% and Lem had net investment income of $500. His employer, Veridian Dynamics, provided Ted with product discounts in the amount of $5,000. The discounts are offered to all employees. Ted purchases stock in Alibaba, Ltd for $20,000. The stock is worth $5,000 on 12/31/2022. ● ● ● Ted invests in an S-corp for a 10% ownership interest. The S-corp earned total profits of $500,000 and distributed cash of $40,000 to Ted. Required: How much must Ted include in his 2022 gross income as a result of the above transactions?
Problem 6: Income Inclusions Ted Crisp reports the following transactions for 2022: • In exchange for providing consulting services Ted entered into an agreement to receive a bag of diamonds with a fair market value of $25,000. The diamonds are delivered to a warehouse in Ted's town on 12/20/2022 but he doesn't pick them up until 01/15/2023. On January 1st, Ted made a loan in the amount of $110,000 to his co- worker Lem so that Lem could purchase Bitcoin. He didn't charge Lem any interest on the loan. The applicable federal funds rate for 2022 was 10% and Lem had net investment income of $500. His employer, Veridian Dynamics, provided Ted with product discounts in the amount of $5,000. The discounts are offered to all employees. Ted purchases stock in Alibaba, Ltd for $20,000. The stock is worth $5,000 on 12/31/2022. ● ● ● Ted invests in an S-corp for a 10% ownership interest. The S-corp earned total profits of $500,000 and distributed cash of $40,000 to Ted. Required: How much must Ted include in his 2022 gross income as a result of the above transactions?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 6: Income Inclusions
Ted Crisp reports the following transactions for 2022:
• In exchange for providing consulting services Ted entered into an
agreement to receive a bag of diamonds with a fair market value of
$25,000. The diamonds are delivered to a warehouse in Ted's town on
12/20/2022 but he doesn't pick them up until 01/15/2023.
• On January 1st, Ted made a loan in the amount of $110,000 to his co-
worker Lem so that Lem could purchase Bitcoin. He didn't charge Lem
any interest on the loan. The applicable federal funds rate for 2022
was 10% and Lem had net investment income of $500.
• His employer, Veridian Dynamics, provided Ted with product discounts
in the amount of $5,000. The discounts are offered to all employees.
• Ted purchases stock in Alibaba, Ltd for $20,000. The stock is worth
$5,000 on 12/31/2022.
• Ted invests in an S-corp for a 10% ownership interest. The S-corp
earned total profits of $500,000 and distributed cash of $40,000 to
Ted.
Required: How much must Ted include in his 2022 gross income as a result
of the above transactions?
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