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
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 16DQ
To determine
Identify the relevant tax issue for Person A.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
James Jones is the owner of a small retail business operated as a sole proprietorship. During 2017, his business recorded the following
items of income and expense:
Revenue from inventory sales
Cost of goods sold
Business license tax
$147,000
Rent on retail space
Supplies
Wages paid to employees
Payroll taxes
Utilities
33,500
2,400
42,000
15,000
22,000
1,700
3,600
a. Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2017 Form
1040.
b. Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2017 Schedule SE, Form
1040.
c. Assume your answers to parts a and b are the same for 2018. Further assume that James's business is not a service business, and
that it has $155,000 unadjusted basis in tangible depreciable property. Calculate James's 2018 Section 199A deduction.
Umair sold some equipments he used in his business on August 29, 2018, what originally purchased for $65,000 on Novermber 21, 2017. The equips yers MACRS method for a total of $17,249. Assume there is no additional actting of gaine and lossed for this taxtpayer.
Is the nature of the gain or loss considered ordinary or long-term?
How does the tax benefit rule apply in the following cases?
Question Content Area
a. In 2021, the Orange Furniture Store, an accrual method sole proprietorship, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2022, Orange took a bad debt deduction for the $1,000. In 2023, Sammy inherited some money and paid Orange the $1,000 he owed. Orange's owner was in the 35% marginal tax bracket in 2021, the 12% marginal tax bracket in 2022, and the 35% marginal tax bracket in 2023.
Orange Furniture must include $fill in the blank 6af05cfde02efa1_1 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $fill in the blank 6af05cfde02efa1_2.
Question Content Area
b. In 2022, Marvin, a cash basis taxpayer, took a $2,000 itemized deduction for state income taxes paid; the deduction was not limited by the SALT cap. This increased his itemized deductions to a total that was $800 more than the…
Chapter 7 Solutions
South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Many years ago, Jack purchased 400shares of Canary...Ch. 7 - Scan is in the business of buying and selling...Ch. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 20DQCh. 7 - Last year Aleshia identified 15,000 as a...Ch. 7 - Prob. 22CECh. 7 - Prob. 23CECh. 7 - Prob. 24CECh. 7 - Prob. 25CECh. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - Prob. 28CECh. 7 - Prob. 29CECh. 7 - Prob. 30CECh. 7 - Prob. 31CECh. 7 - Prob. 32PCh. 7 - Monty loaned his friend Ned 20,000 three years...Ch. 7 - Sally is in the business of purchasing accounts...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53CPCh. 7 - Prob. 54CPCh. 7 - Prob. 1RPCh. 7 - Prob. 2RP
Knowledge Booster
Similar questions
- Which of the following items are exclusions from gross income? a. Alimony payments received (relates to a divorce settlement in 2016). b. Damages award received by the taxpayer for personal physical injurynone were for punitive damages. c. A new golf cart won in a church raffle. d. Amount collected on a loan previously made to a college friend. e. Insurance proceeds paid to the taxpayer on the death of her uncleshe was the designated beneficiary under the policy. f. Interest income on City of Chicago bonds. g. Jury duty fees. h. Stolen funds the taxpayer had collected for a local food bank drive. i. Reward paid by the IRS for information provided that led to the conviction of the taxpayers former employer for tax evasion. j. An envelope containing 8,000 found (and unclaimed) by the taxpayer in a bus station.arrow_forwardBlaze operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: 1,500 for travel, 2,000 for legal advice, and 3,500 for a market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Blazes investigation of the business. a. Blaze deducts the 7,000 of expenses. b. Blaze cannot deduct any of the 7,000 of expenses. c. Blaze deducts 5,000 of the expenses and amortizes the 2,000 balance over a period of 180 months.arrow_forwardHow do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2019, customers had made valid claims for 600,000 that were not paid until 2020. Also, the company estimates that another 400,000 in claims from 2019 sales will be filed and paid in 2020. b. The accrual basis taxpayer reported 200,000 in corporate taxable income for 2019. The state income tax rate was 6%. The corporation paid 7,000 in estimated state income taxes in 2019 and paid 2,000 on 2018 state income taxes when it filed its 2018 state income tax return in March 2019. The company filed its 2019 state income tax return in March 2020 and paid the remaining 5,000 of its 2019 state income tax liability. c. An employee was involved in an accident while making a sales call. The company paid the injured victim 15,000 in 2019 and agreed to pay the victim 15,000 a year for the next nine years.arrow_forward
- Multiple choice: Topic: Income Taxation Juan operates a grocery in Baguio City as sole proprietor. An adjoining lot is used as parking area of his customers. In 2017, due to a business reversal, Juan disallowed the use of the lot as parking space for customers and contemplated on selling it. It was only recently, in June 2021, that Juan was able to sell the lot at a gain. * a) The gain is subject to capital gains tax.b) The gain is subject to regular income tax.c)The gain is subject to final withholding tax on passive income.d) The gain is tax exempt.arrow_forwardSuzy Service Company (SSC) grants an ISO to Bill on March 31, 2016, for 200 shares with an exercise price of $3, the FMV of the stock of March 31, 2016. Mary Jo exercises the ISO on April 15, 2017, when the stock is worth $5 a share. She sold the stock on September 12, 2016, for $6 a share. What are the tax consequences to Mary Jo and SSC on the following dates? (a) March 31, 2016 (Grant) (b) April 15, 2017 (Exercise) (c) September 12, 2017 (Sale of stock)arrow_forwardWhat is the qualified business income deduction for the following problem: Note: This problem is for the 2018 tax year. Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund. During 2018, Janice reported the following income and expense items connected with her business. Income from sale of articles $85,000 Rent 16,500 Utilities 7,900 Supplies 1,800 Insurance 5,000 Travel (including meals of $1,200) 3,500 Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate…arrow_forward
- Umair sold some equipments he used in his business on August 29, 2018, what originally purchased for $65,000 on Novermber 21, 2017. The equips yers MACRS method for a total of $17,249. Assume there is no additional actting of gaine and lossed for this taxtpayer. Assume Umair sold the equipment for $45,000 :(1) What is the amount of realized gain or loss on the sale of the equipment?arrow_forwardAlex registered his sole proprietorship business on 1 January 2022 and has a 31 December year end. Alex managed to secure his first deal on 1 December 2021 and he was paid on 31 December 2021. Alex incurred the following expenses from 1 January 2022 to 31 December 2022: $ Registration costs 2,000 Office rental 48,000 Interest on late Central Provident Fund (CPF) payment 1,000 What is the total tax deduction which Alex can claim in the year of assessment 2023 for the expenses incurred during the financial year ended 31 Decemberarrow_forwardIn 2023, Purple Company reports $200,000 in net income before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $13,850 standard deduction for 2023 (she has no other deductions). Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income if: (LO.1) a. Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year; Kirsten claims a $37,230 deduction for qualified business income. b. Purple Company is a C corporation and the corporation pays out all of its after- tax income as a dividend to Kirsten. c. Purple Company is a C corporation and the corporation pays Kirsten a salary of $158,000.arrow_forward
- 1. Meredith owns her own business. In 2020, she had business revenue of $268,450 and business deductions of $75,900. She had no other activity that affected her tax return. a. Calculate her self-employment tax. b. Calculate her AGI.arrow_forwardRequired information [The following information applies to the questions displayed below.] Eva received $79,000 in compensation payments from JAZZ Corporation during 2022. Eva incurred $14,000 in business expenses relating to her work for JAZZ Corporation JAZZ did not reimburse Eva for any of these expenses. Eva is single and deducts a standard deduction of $12,950. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. Note: Leave no answer blank. Enter zero if applicable. Round your intermediate and final answers to the nearest whole dollar amount. d. Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year? Regular tax liabilityarrow_forwardIn 2021, Wilma Way’s sole proprietorship, WW Bookstore, generated $135,000 net profit. In addition, Wilma recognized a $6,500 Section 1231 gain on the sale of business furniture. The business checking account earned $450 interest income. Required: A. Which of these income items are subject to self-employment tax? B. Compute Wilma’s 2021 self-employment tax, assuming Wilma has no other earned income. C. Compute Wilma's allowable QBI deduction, assuming $55,000 of W-2 wages and $110,000 unadjusted basis of tangible depreciable property. Further assume the overall taxable income limitation on QBI does not apply and Wilma’s overall taxable income is sufficiently high that the W-2 wage limitation applies. D. Compute the overall impact of the bookstore activity on Wilma’s 2021 taxable income.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT