South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
42nd Edition
ISBN: 9781337702546
Author: James C. Young, William H. Hoffman, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
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Chapter 4, Problem 12DQ
To determine
Explain the analysis of Mrs. A towards for wage determination.
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Peter Marwick, an accountant and accrual basis taxpayer, performed accounting services in Year One for Ellie Vader. Peter gave Ellie a bill for $30,000 in Year One. Ellie paid Peter $5,000 in Year One, but Ellie disputes that she owes the other $25,000 because she thinks his work is shoddy. Ellie agreed to put $25,000 in escrow until she and Peter could resolve their legal dispute over Peter's fees. In Year Three after litigation, the dispute is resolved in Peter's favor and he gets the money out of escrow. How much income does Peter have and when?
Question 9 options:
Peter has $30,000 income in Year 1 because he is on the accrual method.
Peter has no income in Year 1 because there is a contested liability.
Ellie has $25,000 in cancellation of indebtedness income in Year 1.
Peter has $5,000 income in Year 1 and $25,000 in Year 3 under the Claim of Right Doctrine.
Classify each of the following cases as "Included in" or "Excluded from" gross income.
Included in/Excluded from
Gross Income
a. Eloise received $150,000 in the settlement of a sex discrimination case against her former employer.
b. Nell received $10,000 for damages to her personal reputation.
Nell also received $40,000 in punitive damages.
c. Orange Corporation, an accrual-basis taxpayer, received $50,000 from a lawsuit it filed against its auditor, who overcharged for services rendered in a previous year.
d. Beth received $10,000 in compensatory damages in a lawsuit she filed against a tanning parlor for severe burns she received from using the parlor's tanning equipment.
Beth also received $30,000 in punitive damages in the lawsuit against the tanning parlor.
e. Joanne received compensatory damages of $75,000 from a cosmetic surgeon who botched her nose job.
Joanne also received $300,000 in punitive damages from the cosmetic surgeon who…
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 $
Chapter 4 Solutions
South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
Ch. 4 - According to the Supreme Court, would it be good...Ch. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Ben lost his job when his employer moved its...Ch. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - A Series EE U.S. government savings bond accrues...Ch. 4 - The taxpayer performs services with payment due...Ch. 4 - Prob. 10DQ
Ch. 4 - Wade paid 7,000 for an automobile that needed...Ch. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - A divorce agreement entered into in 2017 requires...Ch. 4 - Prob. 15DQCh. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 18DQCh. 4 - Prob. 19DQCh. 4 - Prob. 20DQCh. 4 - Prob. 21CECh. 4 - Bigham Corporation, an accrual basis calendar year...Ch. 4 - LO.3 Simba and Zola are married but file separate...Ch. 4 - Casper and Cecile divorced in 2018. As part of the...Ch. 4 - Prob. 25CECh. 4 - Prob. 26CECh. 4 - Prob. 27CECh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Determine the taxpayers gross income for tax...Ch. 4 - Prob. 31PCh. 4 - Determine the taxpayers gross income for tax...Ch. 4 - Prob. 33PCh. 4 - Your client is a partnership, ARP Associates,...Ch. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Prob. 42PCh. 4 - Prob. 43PCh. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - For each of the following, determine the amount...Ch. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Donna does not think she has an income tax problem...Ch. 4 - Prob. 1RPCh. 4 - Prob. 2RPCh. 4 - Prob. 3RPCh. 4 - Prob. 1CPACh. 4 - Fred and Wilma were divorced in year 1 (before...Ch. 4 - Bill and Jane Jones were divorced on January 1,...Ch. 4 - Jake pays the following amounts to his former...Ch. 4 - Mary purchased an annuity that pays her 500 per...
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