Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 19, Problem 50P
a.
To determine
Explain about the tax consequences to person G and the Bank.
b.
To determine
Explain about the tax consequences to person G and the Bank for the situation given.
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Grace is an officer of a local bank that merges with a national bank, resulting in a change of ownership. She loses her job as a result of the
merger, but she receives a cash settlement of $590,000 from her employer under her golden parachute. Her average annual compensation
for the past five tax years was $200,000.
If an amount is zero, enter "0".
a. What are the tax consequences to Grace and the bank of the $590,000 payment?
The $590,000 payment
- considered a golden parachute payment. Therefore, the bank is allowed a deduction of
$
Grace has taxable income of $
and is liable for an excise tax of $
b. Assume instead that Grace's five-year average annual compensation was $110,000 and that she receives $390,000 in the settlement.
What are the tax consequences to Grace and the bank?
The $390,000 payment
considered a golden parachute payment. Therefore, the bank is allowed a deduction of
Grace has taxable income of $
and is liable for an excise tax of $
Your client was the beneficiary of an annuity contract purchased by her stepmother. When the stepmother died, the insurance company paid the client $400,000 and sent her a Form 1099 indicating that the taxable portion (i.e., the amount in excess of the investment in the contract) was $50,000. However, according to the client, her father fraudulently convinced her that he was the intended beneficiary. She gave her father a check equal to the amount she had received from the insurance company. She did not report any of the annuity proceeds in her income tax return. She later discovered the fraud and filed a lawsuit to collect from her father. The IRS has examined your client’s return and has taken the position that she must include the $50,000 in her gross income.
Evaluate the IRS’s position.
2. Six years ago, Alvin loaned his prospective brother-in-law, Bruno, $20,000. The money was used to help Bruno pay for the wedding to Alvin's sister Kitty. Shortly after the wedding, it was discovered that Bruno was already married to someone else. Before Bruno could be indicted for bigamy, he disappeared and has not been heard from since. In the current year, Alvin dies still holding onto Bruno's note. For tax purposes, what do you suggest as to the handling of Bruno's note?
Chapter 19 Solutions
Individual Income Taxes
Ch. 19 - Prob. 1DQCh. 19 - Prob. 2DQCh. 19 - Prob. 3DQCh. 19 - Prob. 4DQCh. 19 - Prob. 5DQCh. 19 - Prob. 6DQCh. 19 - Prob. 7DQCh. 19 - Prob. 8DQCh. 19 - Prob. 9DQCh. 19 - Prob. 10DQ
Ch. 19 - Prob. 11DQCh. 19 - Prob. 12DQCh. 19 - Prob. 13DQCh. 19 - Prob. 14CECh. 19 - Prob. 15CECh. 19 - Prob. 16CECh. 19 - Prob. 17CECh. 19 - Zack, a sole proprietor, has earned income of...Ch. 19 - Prob. 19CECh. 19 - Prob. 20CECh. 19 - Prob. 21CECh. 19 - Prob. 22CECh. 19 - Prob. 23CECh. 19 - Prob. 24CECh. 19 - Prob. 25CECh. 19 - On April 5, 2017, Gustavo was granted an NQSO for...Ch. 19 - Prob. 27PCh. 19 - Prob. 28PCh. 19 - Prob. 29PCh. 19 - Prob. 30PCh. 19 - Prob. 31PCh. 19 - Prob. 32PCh. 19 - Prob. 33PCh. 19 - Prob. 34PCh. 19 - In 2019, Magenta Corporation paid compensation of...Ch. 19 - Prob. 36PCh. 19 - Prob. 37PCh. 19 - Prob. 38PCh. 19 - Prob. 39PCh. 19 - Prob. 40PCh. 19 - Prob. 41PCh. 19 - Prob. 42PCh. 19 - Prob. 43PCh. 19 - Prob. 44PCh. 19 - Carri and Dane, ages 34 and 32, respectively, have...Ch. 19 - Prob. 46PCh. 19 - Prob. 47PCh. 19 - Prob. 48PCh. 19 - Prob. 49PCh. 19 - Prob. 50PCh. 19 - Prob. 51PCh. 19 - Prob. 52PCh. 19 - Prob. 53PCh. 19 - Prob. 54PCh. 19 - Prob. 55PCh. 19 - Prob. 56PCh. 19 - Prob. 57PCh. 19 - Prob. 1RPCh. 19 - Prob. 2RPCh. 19 - Prob. 3RPCh. 19 - Prob. 6RPCh. 19 - Prob. 8RPCh. 19 - Prob. 1CPACh. 19 - Ryan is 39 years old and works as a real estate...Ch. 19 - Prob. 3CPACh. 19 - Prob. 4CPA
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