Subject: acounting In 2020, Mrs. Ulm paid $80,000 for a corporate bond with a $100,000 stated redemption value. Based on the bond's yield to maturity,amortization of the $20,000 discount was $1,512 in 2020, $1,480 in 2021, and $295 in 2022. Mrs. Ulm sold the bond for $84,180 inMarch 2022. Assume the taxable year is 2022.Required:a. What are her tax consequences in each year assuming that she bought the newly issued bond from the corporation?b. What are her tax consequences in each year assuming that she bought the bond in the public market through her broker?Complete this question by entering your answers in the tabs below.Required A Required BWhat are her tax consequences in each year assuming that she bought the newly issued bond from the corporation?Amount

The following basic information as follows:- Mrs. Ulm needs to recognize the amount. of $1,512 in…

Answered: Required: a. What are her tax…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter13: Property Transact Ions: Determination Of Gain Or Loss, Basis Considerations, And Nontaxable Exchanges

Section: Chapter Questions

Problem 48P

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On January 1, 2019, Kunto, a cash basis taxpayer, pays 46,228 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives 50,000. In your computations: a. Compute Kuntos gross income from the certificate for 2019. b. Compute Kuntos gross income from the certificate for 2020. Round any amounts to the nearest dollar.
In 2019, Mrs. Ulm paid $80,000 for a corporate bond with a $100,000 stated redemption value. Based on the bond's yield to maturity, amortization of the $20,000 discount was $1,512 in 2019, $1,480 in 2020, and $295 in 2021. Mrs. Ulm sold the bond for $84,180 in March 2021. Assume the taxable year is 2021. Required: a. What are her tax consequences in each year assuming that she bought the newly issued bond from the corporation? b. What are her tax consequences in each year assuming that she bought the bond in the public market through her broker? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B What are her tax consequences in each year assuming that she bought the bond in the public market through her broker? 2020 Ordinary Income Amount $ 0 2021 Ordinary Income $ 893 2021 Long-term capital gain $ 893 2019 Ordinary Income $ 0
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On July 1, 2020, Katrina purchased tax-exempt bonds (face value of $89,500) for $98,450. The bonds mature in five years, and the annual interest rate is 3%. a. How much interest income and/or interest expense must Katrina report in 2020? The interest income Katrina must include in gross income in 2020 is $________ The interest expense Katrina may deduct in 2020 is $_______ b. What is Katrina's adjusted basis for the bonds on January 1, 2021? $_______
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On December 31, 2020, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2020. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirements. Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) Amortization of Original Issue Discount Taxpayers Basis for the Bond Year Interest Received Interest Income December 31, 2020 June 30, 2021 December 31, 2021 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Phil must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Phil must recognize as ordinary income for the first semiannual period is Requirement…
On October 1, 2019, Jenkins Corporation bought bonds with a face value of $200,000 for $199,175, which included accrued interest. The bonds are due December 31, 2021, and carry a face rate of interest of 10.5%. Interest on the bonds is payable semiannually on June 30 and December 31. Jenkins uses the straight-line method to amortize the discount. Required: 1. Prepare journal entries to record the purchase of the bonds, each interest receipt, and the retirement of the issue on December 31, 2021. 2. Next Level If Jenkins failed to separately record the interest at acquisition, explain the errors that would occur in the company’s financial statements (no calculations are required).
On September 1, 2020, Elizabeth bought a $10,000 three-year bond that pays 9% interest per year, compounded yearly. No interest is received until the maturity date of the bond on August 31, 2023. Which one of the following statements is correct, assuming the figure is rounded to the nearest dollar? (Show Calculations) (a) In 2020, Elizabeth must report $300 of interest income. (b) In 2021, Elizabeth must report $927 of interest income. (c) In 2022, Elizabeth must report $981 of interest income. (d) In 2023, Elizabeth must report all interest earned on the bond.
Assume that Cunningham's 2025 pretax accounting income is $55,600 and that Cunningham reports $25,000 more depreciation expense for tax purposes than it shows in the accounting records, expected to reverse in 2027. Cunningham estimates that warranty costs associated with sales in 2025 will be $30,000; Cunningham incurred another $28,000 in warranty claims satisfied in 2025. Cunningham's tax-free municipal bond earned another $14,000 in 2025. A new tax law is enacted in 2025, increasing the tax rate from 21% in 2025 to 24% in 2026 and 25% in 2027 and thereafter. Prepare the journal entry necessary to record income taxes at the end of 2025. d. e. What will Cunningham report in the tax section of its 2025 income statement?
On January 1, 2019, Shay Company issues $700,000 of 10%, 15-year bonds. The bonds sell for $684,250. Six years later, on January 1, 2025, Shay retires these bonds by buying them on the open market for $731,500. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2019, through December 31, 2024? 3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2024? 4. Prepare the journal entry to record the bond retirement.

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Required: a. What are her tax consequences in each year assuming that she bought the newly issued bond from the corporation? b. What are her tax consequences in each year assuming that she bought the bond in the public market through her broker?