Rose opened an Office Cleaning Service company on January 1, 2020. During 2020 she had the following transactions. (1) She started the business with investing $30,000 of her own money (business was organized as corporation) (2) She borrowed $45,000 from bank by issuing a 5- year note. (3) She purchased $15.000 of furniture and
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- Lou had the following transactions for 2020: Salary $ 80,000 Alimony paid (divorce final in 2016) (4,000) Recovery from car accident— Personal injury damages $40,000 Punitive damages 70,000 110,000 Gift from parents 20,000 Property sales— Loss on sale of boat (used for pleasure and owned 4 years) ($4,000) Gain on sale of GE stock (held for 10 months as an investment) 4,000 (–0–) What is Maya’s AGI for 2020?Kristian purchased a new home for $200,000. He put down $50,000 in cash and took out a mortgage for the rest. At the time of closing, he also paid $1,000 for title insurance, $500 in recording fees, and the bank required that he place $2,500 in an escrow account for property taxes. What is the basis of the home?Hugo Garcia is preparing his balance sheet and income and expense statement for the year ending December 31, 2020. He is having difficulty classifying a few items and asks for your help. Which of the transactions are assets, liabilities, income, or expense items? a. Hugo rents a house for $1,350 a month. b. Hugo bought diamond earrings for his wife and charged them using his Visa card. The earrings cost $900, but he hasn’t yet received the bill. c. Hugo borrowed $3,500 from his parents last fall, but so far, he has made no payments to them. d. Hugo makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500. e. Hugo paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received. f. Hugo invested $2,300 in a mutual fund. g. Hugo’s Aunt Lydia gave him a birthday gift of $300.
- In November 2020, after having incorporated Cookie Creations Inc., Natalie begins operations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead, she will focus on offering cooking classes. The following events occur. Nov. 8 Natalie cashes in her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 Natalie opens a bank account for Cookie Creations Inc. 8 Natalie purchases $500 of Cookie Creations’ common stock. 11 Cookie Creations purchases paper and other office supplies for $95. (Use Supplies.) 14 Cookie Creations pays $125 to purchase baking supplies, such as flour, sugar, butter, and chocolate chips. (Use Supplies.) 15 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $550. Natalie decides to start using it only in her new business. She estimates that the…Yolanda is a cash basis taxpayer with the following tranasctions during the year: Cash received from sales of products $70,000 Cash paid for expenses (except rent and interest) $40,000 Rent prepaid on a leased building for 18 monts beginning December 1 $48,600 Prepaid interest on a bank loan, paid on December 31 for the next 3 months 5,000 Calculate Yolanda's income from her business for this calendar year.Talbot purchases business machinery for a price of $100,000. Talbot pays the seller $20,000 in cash and finances the rest by giving the seller a note for $80,000. What is Talbot’s initial basis in this machinery?
- During 2022, she drove the car 16,200 miles. 12,325 of those miles were for business purposes (7,300 miles through 6/30, 5,025 miles through 12/31). She paid a total of $650 of insurance, $1,280 of interest on her car loan, $830 for repairs & maintenance, $270 for licensing, and $2,310 for fuel. She also paid $225 for parking and tolls exclusively on business trips. She uses the standard mileage rate to compute her transportation deduction for the year. What is her total deduction for expenses related to her car for 2022.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?Jessica purchased a home on January 1, 2022, for $500,000 by making a down payment of $200,000 and financing the remaining $300,000 with a loan, secured by the residence, at 6 percent. During 2022 and 2023, Jessica made interest-only payments on this loan of $18,000 (each year). On July 1, 2022, when her home was worth $500,000, Jessica borrowed an additional $125,000 secured by the home at an interest rate of 8 percent. During 2022, she made interest-only payments on the second loan in the amount of $5,000. During 2023, she made interest-only payments on the second loan in the amount of $10,000. What is the maximum amount of the $28,000 interest expense Jessica paid during 2023 that she may deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.) multiple choice: Multiple Choice: a. $0 b. $10,000 c. $26,353 d. $26,000 e. $28,000
- In year 1, Abby purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4 the outstanding balance on the loan was $40,000. On January 1, year 4, when her home was worth $300,000, Abby refinanced the home by taking out a $120,000 mortgage at 5 percent. With the loan proceeds, she paid off the $40,000 balance of the existing mortgage and used the remaining $80,000 for purposes unrelated to the home. During year 4, she made interest-only payments on the new loan of $6,000. What amount of the $6,000 interest expense on the new loan can Abby deduct in year 4 on the new mortgage as home-related interest expense?Melanie is employed full-time as an accountant for a national hardware chain. She recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2019 are as follows: Real property taxes Interest on home mortgage Operating expenses of home $3,600 3,800 900 Melanie's residence cost $350,000 (excluding land) and has living space of 2,000 square feet, of which 20% (400 square feet) is devoted to business. The office was placed in service in February 2018, and under the Regular Method, Melanie had an unused office in the home deduction of $800 for 2018. Assume there is sufficient net income from her consulting practice. Click here to access the depreciation table. Round deprecation to the nearest dollar. a. What amount can Melanie claim this year for her office in the home deduction under the Regular Method? $ 3,455 X b. What is Melanie's office…Jessica purchased a home on January 1, 2018 for $510,000 by making a down payment of $200,00 and financing the remaining $310,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018 and 2019, Jessica made interest-only payments on this loan of $18,600 (each year). On July 1, 2018, when her home was worth $510,000 Jessica borrowed an additional $127,500 secured by the home at an interest rate of 8 percent. During 2018, she made interest-only payments on the second loan in the amount of $5,100. During 2019, she made interest only on the second loan in the amount of $10,200. What is the maximum amount of the $28,800 interest expense Jessica paid during 2019 may she deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.) Multiple Choice ___ $0. ___ $10,200. ___ $27,106. ___ $6,600.