South-western Federal Taxation 2018: Individual Income Taxes
41st Edition
ISBN: 9781337385886
Author: William H. Hoffman, James C. Young, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
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Chapter 14, Problem 31P
a.
To determine
Identify the amount of the cost recovery deduction Person N must report on the 2018 income tax return.
b.
To determine
Compute the adjusted basis of building at the end of 2018.
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Martha sells her house to Sachin on November 1, 2010, for $480,000. On December 5, the property tax bill from the county is for $4,800, Sachin concludes that he owes only for the months of November and December and that the other $4,000 is Martha’s liability. On Schedule A of Form 1040 for 2010, Sachin deducts the $800 of property tax he paid.
When Sachin tries to sell his house 18 months later, he discovers that the county has placed a lien on the property. In order to get a clear title, he pays the $4,000 of property taxes due. He subsequently sells his house for a recognized gain of $38,000.
Sachin deducts the $4,000 of property taxes that relate to the period Martha owned the house of Schedule A of his 2012 tax returns.
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John owns a convenience shop called City Conv. The following events occurred for John during 20192020 financial year.
John incurred legal expenses as he was sued for false advertising.
John purchased new fridge to the shop - $800. In addition, his builder added more space to the shop front. This cost him $22,000.
John ordered 1000 new T-shirts with printed City Conv’s logos for marketing purposes. These costs him $1,500.
John received a City of Sydney fine for putting his sales item for display outside his shop without a permit. He required to apply for a permit to use the footpath.
Required:
With reference to relevant legislation and case law advise John on the assessability and/or deductibility of above events. (maximum 300 words)
Michael is self-employed and reports the income from his business on Schedule C of his Form 1040. This month, Michael incurred the following costs related to his business: $750 fine to the EPA for violation of environmental regulations $1,200 to a part-time employee who assists in the bookkeeping for Michael’s business $300 contribution to the Utah Republican Party (political contribution) $200 for dinner, during which Michael and an important client discussed business $150 for tickets to see the Utah Jazz after the client dinner $2,500 in rent and utilities How much of the above expenses can Michael deduct on his tax return?
$5,100
$0
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$4,100
Chapter 14 Solutions
South-western Federal Taxation 2018: Individual Income Taxes
Ch. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - LO.1 Taylor is negotiating to buy some land. Under...Ch. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - LO.4 Marilyn owns land that she acquired three...Ch. 14 - Prob. 15DQCh. 14 - Prob. 16CECh. 14 - Prob. 17CECh. 14 - Prob. 18CECh. 14 - Prob. 19CECh. 14 - Prob. 20CECh. 14 - Heather owns 400 shares of Diego Corporation...Ch. 14 - Prob. 22CECh. 14 - Prob. 23CECh. 14 - Prob. 24CECh. 14 - Prob. 25CECh. 14 - Prob. 26CECh. 14 - Prob. 27CECh. 14 - Prob. 28PCh. 14 - Prob. 29PCh. 14 - Prob. 30PCh. 14 - Prob. 31PCh. 14 - Prob. 32PCh. 14 - Prob. 33PCh. 14 - Prob. 35PCh. 14 - Yancys personal residence is condemned as part of...Ch. 14 - Prob. 41PCh. 14 - Nicky receives a car from Sam as a gift. Sam paid...Ch. 14 - Prob. 44PCh. 14 - Prob. 46PCh. 14 - Prob. 47PCh. 14 - Prob. 50PCh. 14 - Prob. 51PCh. 14 - Prob. 52PCh. 14 - On December 28, 2018, Kramer sells 150 shares of...Ch. 14 - Prob. 54PCh. 14 - Prob. 55PCh. 14 - Prob. 56PCh. 14 - Alton Newman, age 67, is married and files a joint...Ch. 14 - Prob. 58CPCh. 14 - Prob. 1RPCh. 14 - Prob. 2RPCh. 14 - Prob. 3RPCh. 14 - Prob. 1CPACh. 14 - Prob. 2CPACh. 14 - Prob. 3CPACh. 14 - Prob. 4CPACh. 14 - Prob. 5CPACh. 14 - Prob. 6CPA
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