Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 20MCQ
To determine
Introduction:
To choose: The amount of J’s wage and qualified property limit on the QBI deduction
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Income Tax Fundamentals 2020
Ch. 10 - Which of the following may not be treated as a...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Abigail contributes land with an adjusted basis of...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQ
Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - Prob. 15MCQCh. 10 - Prob. 16MCQCh. 10 - Kendra is an attorney and owns 60 percent of a law...Ch. 10 - Prob. 18MCQCh. 10 - In 2019, Gloria, a single taxpayer, receives a...Ch. 10 - Prob. 20MCQCh. 10 - Prob. 21MCQCh. 10 - Prob. 22MCQCh. 10 - Prob. 23MCQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16P
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- Shelly has 200,000 of QBI from her local jewelry store (a sole proprietorship). Shellys proprietorship paid 30,000 in W-2 wages and has 20,000 of qualified property. Shellys spouse earned 74,400 of wages as an employee, they earned 20,000 of interest income during the year, and they will be filing jointly and using the standard deduction. What is their QBI deduction for 2019?arrow_forwardNell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2019. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement? a. In consideration for her one-half interest in their personal residence. Kirby will transfer to Nell stock with a value of 200,000 and 50,000 of cash. Kirbys cost of the stock was 150,000, and the value of the personal residence is 500,000. They purchased the residence three years ago for 300,000. b. Nell will receive 1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate. c. Nell is to have custody of their 12-year-old son. Bobby. She is to receive 1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only 300 per month for the remainder of her life.arrow_forwardFreda is a cash basis taxpayer. In 2019, she negotiated her salary for 2020. Her employer offered to pay her 21,000 per month in 2020 for a total of 252,000. Freda countered that she would accept 10,000 each month for the 12 months in 2020 and the remaining 132,000 in January 2021. The employer accepted Fredas terms for 2020 and 2021. a. Did Freda actually or constructively receive 252,000 in 2020? b. What could explain Fredas willingness to spread her salary over a longer period of time? c. In December 2020, after Freda had earned the right to collect the 132,000 in 2020, the employer offered 133,000 to Freda at that time, rather than 132,000 in January 2021. The employer wanted to make the early payment so as to deduct the expense in 2020. Freda rejected the employers offer. Was Freda in constructive receipt of the income in 2020? Explain.arrow_forward
- Zack, a sole proprietor, has earned income of 85,000 in 2019 (after the deduction for one-half of self-employment tax). What is the maximum contribution Zack may make to a defined contribution Keogh plan?arrow_forwardAlicia and Rafel are in the process of negotiating a divorce agreement to be finalized in 2019. They both worked during the marriage and contributed an equal amount to the marital assets. They own a home with a fair market value of 400,000 (cost of 300,000) that is subject to a mortgage of 250,000. They have lived in the home for 12 years. They also have investment assets with a cost of 160,000 and a fair market value of 410,000. Thus, the net worth of the couple is 560,000 (400,000 250,000 + 410,000). The holding period for the investments is longer than one year. Alicia would like to continue to live in the house. Therefore, she has proposed that she receive the residence subject to the mortgage, a net value of 150,000. In addition, she would receive 17,600 each year for the next 10 years, which has a present value (at 6% interest) of 130,000. Rafel would receive the investment assets. If Rafel accepts this plan, he must sell one-half of the investments so that he can purchase a home. Assume that you are counseling Alicia. Explain to Alicia whether the proposed agreement would be fair on an after-tax basis.arrow_forwardLori, who is single, purchased 5-year class property for 200,000 and 7-year class property for 420,000 on May 20, 2019. Lori expects the taxable income derived from her business (without regard to the amount expensed under 179) to be about 550,000. Lori has determined that she should elect immediate 179 expensing in the amount of 520,000, but she doesnt know which asset she should completely expense under 179. She does not claim any available additional first-year depreciation. a. Determine Loris total cost recovery deduction if the 179 expense is first taken with respect to the 5-year class asset. b. Determine Loris total cost recovery deduction if the 179 expense is first taken with respect to the 7-year class asset. c. What is your advice to Lori? d. Assume that Lori is in the 24% marginal tax state and Federal income bracket and that she elects 179 for the 7-year asset. Determine the present value of the tax savings from the cost recovery deductions for both assets. See Appendix H for present value factors, and assume a 6% discount rate. e. Assume the same facts as in part (d), except that Lori decides not to use 179 on either asset. Determine the present value of the tax savings under this choice. In addition, determine which option Lori should choose. f. Present your solution to parts (d) and (e) of the problem in a spreadsheet using appropriate Microsoft Excel formulas. E-mail your spreadsheet to your instructor with a two-paragraph summary of your findings.arrow_forward
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