Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer and is trying to evaluate the tax consequences of three different lease arrangements. Under lease 1, the building rents for $610 per month, payable on the first of the next month, and the tenant must make a $610 security deposit that is refunded at the end of the lease. Under lease 2, the building rents for $6,710 per year, payable at the time the lease is signed, but no security deposit is required. Under lease 3, the building rents for $610 per month, payable at the beginning of each month, and the tenant must pay a security deposit of $1,220 that is to be applied toward the rent for the last two months of the lease. Note: Leave no answers blank. Enter zero if applicable. Required: a. What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely payments under that lease? b. What amounts are included in Ralph's gross income this year if the tenant signs lease 2 on December 31 and makes timely payments under that lease? c. What amounts are included in Ralph's gross income this year if the tenant signs lease 3 on November 30 and makes timely payments under that lease? Complete this question by entering your answers in the tabs below. Required A Required B Required C What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely payments under that lease? Amount included in Gross Income
Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer and is trying to evaluate the tax consequences of three different lease arrangements. Under lease 1, the building rents for $610 per month, payable on the first of the next month, and the tenant must make a $610 security deposit that is refunded at the end of the lease. Under lease 2, the building rents for $6,710 per year, payable at the time the lease is signed, but no security deposit is required. Under lease 3, the building rents for $610 per month, payable at the beginning of each month, and the tenant must pay a security deposit of $1,220 that is to be applied toward the rent for the last two months of the lease. Note: Leave no answers blank. Enter zero if applicable. Required: a. What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely payments under that lease? b. What amounts are included in Ralph's gross income this year if the tenant signs lease 2 on December 31 and makes timely payments under that lease? c. What amounts are included in Ralph's gross income this year if the tenant signs lease 3 on November 30 and makes timely payments under that lease? Complete this question by entering your answers in the tabs below. Required A Required B Required C What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely payments under that lease? Amount included in Gross Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer and is trying to evaluate the tax
consequences of three different lease arrangements. Under lease 1, the building rents for $610 per month, payable on the first of the
next month, and the tenant must make a $610 security deposit that is refunded at the end of the lease. Under lease 2, the building
rents for $6,710 per year, payable at the time the lease is signed, but no security deposit is required. Under lease 3, the building rents
for $610 per month, payable at the beginning of each month, and the tenant must pay a security deposit of $1,220 that is to be applied
toward the rent for the last two months of the lease.
Note: Leave no answers blank. Enter zero if applicable.
Required:
a. What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely payments
under that lease?
b. What amounts are included in Ralph's gross income this year if the tenant signs lease 2 on December 31 and makes timely
payments under that lease?
c. What amounts are included in Ralph's gross income this year if the tenant signs lease 3 on November 30 and makes timely
payments under that lease?
Complete this question by entering your answers in the tabs below.
Required C
What amounts are included in Ralph's gross income this year if a tenant signs lease 1 on December 1 and makes timely
payments under that lease?
Amount included in Gross Income.
Required A Required B
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