CONCEPTS IN FED.TAX.,2020-W/ACCESS
CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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Chapter 7, Problem 11DQ
To determine

State the limitations on the deductibility of capital losses by individuals and compare with those for corporations.

Capital losses of individuals are adjusted against other capital gains of the individuals during that particular year. When the result of adjusting is a loss then the individual can deduct to a maximum of $3,000 from the net capital loss. Any other excess losses are carried forward and can be used in the next year’s capital gain and loss adjusting.

Corporations also net together capital losses and capital gains however, if it results in a net capital loss, then loss is not deductible in the period in which it is incurred.  The net capital loss can be carried back to 3 years and be adjusted against any net capital gains on which the corporation paid tax to obtain a refund of the taxes which are paid.  If the carryback period is not sufficient to absorb the loss completely then any remaining loss can be carried forward for next 5 years and used to offset capital gains.

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Hanks Company estimates its manufacturing overhead to be $450,000 and its direct labor costs to be $300,000 for year 5. Hanks worked three jobs for the year. Job 5-1, which was sold during year 5, had actual direct labor costs of $90,000. Job 5-2, which was completed but not sold at the end of the year, had actual direct labor costs of $140,000. Job 5-3, which is still in work-in-process inventory, had actual direct labor costs of $80,000. The actual manufacturing overhead for year 5 was $470,000. Manufacturing overhead is applied on the basis of direct labor costs. a) How much overhead was applied to each job in year 5? b) What was the over-or underapplied manufacturing overhead for year 5?
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Calculate annual depreciation expense
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