Chapter 1, Problem 3P

A client approached you with a question about the tax consequences of setting up an irrevocable trust for his two grandchildren to attend college. Please respond to the following: Discuss the tax issues or consequences of the generation-skipping provision and a direct gift to the grandchildren instead of creating the trust. Make at least two recommendations to support either a direct gift to the grandchildren or the creation of the trust.

Assume the taxpayer does NOT wish to contribute to the Presidential Election Fund, unless otherwise stated in the problem. Assume all taxpayers did NOT receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency during the year. Rick and Cindy Davis are married and file a joint return. They live at 3223 Taccone Ave., Apt. 37, Medford, MA 02155. Rick is an elementary school teacher in the Medford Public School system and Cindy is currently a homemaker after losing her job in late 2019. Cindy's social security number is 412-34-5671 (date of birth 10/11/1981) and Rick's is 412-34-5670 (date of birth 3/19/1979). Rick's W-2 contained the following information: Wages (box 1) Federal W/H (box 2) = Social security wages (box 3) = $ 70,245.55 $ 5,924.43 = $ 70,245.55 Social security W/H (box 4) = $ 4,355.22 Medicare wages (box 5) = $ 70,245.55 Medicare W/H (box 6) = $ 1,018.56 Rick and Cindy have interest income of $237 from a savings account at Boston…

James has just been audited by the IRS and, as a result, has been assessed a substantial deficiency (which he has not yet paid) in additional income taxes. In preparing his defense, James advances the following possibilities. Are any of them viable? Although a resident of Texas, James plans to sue in a District Court in Oregon that appears to be more favorably inclined toward taxpayers. If (a) is not possible, James plans to take his case to a Texas state court as he is more familiar with the practices there. Yes If he loses at the trial court level, James plans to appeal to either the Federal Circuit or the 11th Circuit Court of Appeals because he has relatives in both Washington D.C., and Atlanta. Staying with these relatives could save James lodging expense while his appeal is being heard by the court. Even if he does not win at the trial court or appeal court level, James feels certain of success on an appeal to the Supreme Court.

Trudy has just recorded a deed that gives her daughter, Sally, a life estate in the family farm plus a general power of appointment over the farm. Which is a CORRECT statement regarding the property interests given to Sally?   A) A disadvantage of the life estate is that it is a contingent interest.     B) A disadvantage of the general power of appointment is that Sally will not be able to appoint the remainder interest in the property to herself.     C) A disadvantage of the life estate is that it is a future interest.     D) An advantage of the general power of appointment is that Sally will be able to become the sole owner of the farm.

Connor is considering investing in a real estate partnership. Exact detail are still unknow, but what question should Connor aks? does it matter if connor helps manage the properties? how does it influence their tax return? (this questions relate in personal tax return form 1040)

As indicated by IRS, when an individual has more than one area of business, including home, for a solitary business. At that point the chief business environment is equipped for the deducting the costs of home possessed or leased. According to question taxpayer can write off the expenses of Condominium house taken on rent as the principal place of business is Condominium. House expenses of Sarasota house are not deductible.

! Required information [The following information applies to the questions displayed below.] Emily, who is single, has been offered a position as a city landscape consultant. The position pays $147,800 in cash wages. Assume Emily has no dependents. Emily deducts the standard deduction instead of itemized deductions, she is not eligible for the qualified business income deduction, and she did not make any charitable donations. (Use the tax rate schedules.) a. What is the amount of Emily's after-tax compensation (ignore payroll taxes)? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Description Amount (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Taxable income (6) Income tax liability After-tax compensation

Ned is an independent contractor working with Joe remodeling a home, and Joe pays him using cryptocurrency. Ned then took the cryptocurrency and purchased tools for work. How should he report the income and what would be the basis of the amount he received?

Jane, a partner in a CPA firm, borrows money from one of her firm's audit clients. She is a covered member with respect to this client. For which type of loan may Jane borrow from the client and not impair her independence? A.) She uses the money to help her parents B.) She purchases a home that will be her primary residence C.) She uses the money to obtain a master's degree D.) She purchases an automobile, which is collateral for the loan