!Required information[The following information applies to the questions displayed below.]Renee operates a proprietorship selling collectibles over the Web. This year, Renee's business reported revenue of $95.5million and deducted $88.6 million in expenses and loss carryovers. Her business deductions included cost of goods soldof $48.5 million, sales commissions paid of $16.9 million, $10.5 million of interest paid on a mortgage, $10.7 million ofdepreciation, and $2 million deduction for a net operating loss carryover.c. Suppose that Renee's revenue includes $5 million of business interest income. What is the maximum amount of business interestexpense that could be deducted this year under the business interest limitation?Note: Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.X Answer is complete but not entirely correct.$4.32 x millionDeductible Business Interest Expense

ATI = Business Revenue - Business Expenses + Business Interest IncomeATI = $95.5 million - $88.6…

Answered: Renee operates a proprietorship selling…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lewes Company appropriately uses the installment sales method for tax purposes and the accrual method for revenue recognition for accounting purposes. Pertinent data at December 31, 2016, the close of the first year of operations, are as follows: Revenue Recognized Revenue Recognized Customer for Accounting Purposes for Tax Purposes Lowe's Builders $200,000 $100,000 Top Down Plumbing 500,000 350,000 Glass Plus Windows 600,000 350,000 Lewes's tax rate is 30%. What amount should be included in the deferred tax account at December 31, 2016 for these installment sales?
During 2018, Raines Umbrella Corporation had sales of $738,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $562,000, $99,000, and $133,000, respectively. In addition, the company had an interest expense of $104,000 and a tax rate of 30 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corporation paid out $17,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt? Multiple Choice O $77,450 O $44,000 O $94,000 $0 O $19,500
In July 2021, Cassie purchases equipment for $55,000 to be used in her business. Assuming Cassie has a small net loss from her business prior to the deduction, what is the maximum amount of cost recovery Cassie can deduct? a. $55,000 b. $7,860 c. $27,500 d. $31,430
Renee operates a proprietorship selling collectibles over the Web, and last year she purchased a building for $24 million for her business. This year, Rene’s proprietorship reported revenue of $95.5 million and incurred total expenses of $88.6 million. Her expenses included cost of goods sold of $48.5 million. Sales commissions paid of $16.9 million. $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. What’s Renee’s adjusted taxable income for purposes of calculating the limitation on business interest expense? What is the maximum amount of business interest expense that Renee can deduct this year, and how is the disallowed interest expense (if any) treated? Suppose that Renee’s revenue includes $5 million of business interest income. What is the maximum amount of business interest expense that could be deducted this year under the business interest limitation?
FruAgro Company has average annual gross receipts of $50 million annually. This year, FruAgro earned $1 million of business interest income, incurred $20 million of business interest expense and has adjusted taxable income of $37 million. Required: Compute FruAgro's current deduction for business interest and the amount of any business interest carryforward. (The CARES Act applies. Enter your answers in dollars not in millions of dollars.) Answer is complete but not entirely correct. Business interest deduction Business interest carryforward Amount $ 18,500,000 $1,000,000
Mainline Clinic, a for-profit business, had revenues of $11.1 million last year. Expenses other than depreciation totaled 67 percent of revenues, and depreciation expense was $1.3 million. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Mainline must pay taxes at a rate of 39 percent of pretax (operating) income. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Mainline’s net income? If net income would go down, enter the amount of the change as a negative number. If net income would go up, enter the amount of the change as a positive number.
Ms. Drake sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Accounts receivable: 42,250 Inventory: 149,600 Furniture and Equipment: 63,750 Accumulated Depreciation: (51,000) Leashold Improvements: 23,000 Accumulated Amortization: (4,600) The purchaser paid a lump-sum price of $316,500 cash for the business. The sales contract stipulates that the FMV of the business inventory is $154,000, and the FMV of the remaining balance sheet assets equals adjusted tax basis. Assuming that Ms. Drake’s marginal tax rate on ordinary income is 35 percent and her rate on capital gain is 15 percent, compute the net cash flow from the sale of her business.
During 2018, Raines Umbrella Corporation had sales of $749,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $576,000, $101,000, and $131,000, respectively. In addition, the company had an interest expense of $99,000 and a tax rate of 40 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corporation paid out $16,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt?
McCoy’s Fish House purchases a tract of land and an existing building for $1,000,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $3,000. The company also pays $14,000 in property taxes, which includes $9,000 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $5,000 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $50,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5,000 and pays an additional $11,000 to level the land.Required: Determine the amount McCoy’s Fish House should record as the cost of the land.
Greene operates a parking lot that yielded net income of $13,000 during the current year. The only other transactions that Mr. Greene had during the year were: 1) a gain of $16,000 on the sale of some Dell Corporation stock that he bought two years ago; 2) a loss of $10,000 on the sale of one acre of the land used in his parking lot business; 3) a gain of $4,000 on the sale of half an acre of the land used in his parking lot business. All of the land used in his parking lot operations was purchased seven years ago. Mr. Greene's net capital gain from sale or exchange of capital assets for the current year is Question 14 options: 20,000 16,000 10,000 10,000
During the year, Tulip had the following transactions: Long-term loss on the sale of business use equipment $7,000 Long-term loss on the sale of personal use camper 6,000 Long-term gain on the sale of personal use boat 3,000 Short-term loss on the sale of stock investment 4,000 Long-term loss on the sale of land investment 5,000 Before the transactions, Tulip's AGI was $100,000. Determine Tulip's new AGI, the rate the income will be taxed, and any carryovers.
Ryan is self employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,850 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 14,600 miles. Ryan estimates that he drove approximately 1,560 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,400 miles. What business expense amount can Ryan deduct (if any) for these trips?

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