Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 8, Problem 50P
LO.2, 4, 9 Dennis Harding is considering acquiring a new automobile that he will use 100% for business. The purchase price of the automobile would be $48,500. If Dennis leased the car for five years, the lease payments would be $375 per month. Dennis will acquire the car on January 1, 2019. The inclusion dollar amounts from the IRS table for the next five years are $60, $130, $194, $232, and $268.
Dennis wants to know the effect on his adjusted gross income of purchasing versus leasing the car for the next five years. He does not claim any available additional first-year
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Mr. Chan decided to rent out one of his properties, and spent $200,000 to renovate the property in order to maximize the rental income. He finally rented the property for $50,000 per month for a three year term starting from 1 January 2019. How much can he claim for statutory deduction under property tax for the year of assessment 2020/21?
Select one:
a.
$30,000
b.
$120,000
c.
None of above
d.
$200,000
On 1 July 2019 Richard bought a rental property for $920,000. He borrowed $630,000 on the same day from the bank to buy the property. The term of the loan was 4 years. The property was leased on 1 July 2019. He received rent in cash from his tenants during the year ended 30 June 2020 in the amount of $95,000. Included in this amount was a payment of $11,000 on 28 June 2020 as rent for the month of July 2020.
He also received $80,000 in wages working for a Real Estate company.
He has no deductions apart from interest on the loan of $24,000 for the year ended 30 June 2020.
Required:
Explain the relevant legal provisions and calculate Richard’s income tax for the year ended 30 June 2020.
Required Information
[The following information applies to the questions displayed below.]
Javier and Anita Sanchez purchased a home on January 1 of year 1 for $1,000,000 by paying $200,000 down and
borrowing the remaining $800,000 with a 6 percent loan secured by the home. The Sanchezes made interest-only
payments on the loan in years 1 and 2. (Leave no answer blank. Enter zero if applicable.)
d. Assume year 1 is 2020 and by the beginning of year 4, the Sanchezes have pald down the principal amount of the loan to
$500,000. In year 4, they borrow an additional $100,000 through a loan secured by the home in order to purchase a new car. The new
loan carries a 7 percent interest rate and is termed a "home equity loan" by the lender. What amount of interest can the Sanchezes
deduct on the $100,000 loan?
Maximum deductible interest expense
Chapter 8 Solutions
Individual Income Taxes
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - LO.2 Robert purchased and placed in service...Ch. 8 - LO.2 Jim owns a very large ranch. A large part of...Ch. 8 - Prob. 10DQ
Ch. 8 - Explain how the 179 immediate expensing deduction...Ch. 8 - Prob. 12DQCh. 8 - Discuss the definition of business income as it is...Ch. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 19DQCh. 8 - Prob. 20DQCh. 8 - LO.2 Euclid acquires a 7-year class asset on May...Ch. 8 - LO.2 Hamlet acquires a 7-year class asset on...Ch. 8 - LO.2 Lopez acquired a building on June 1, 2014,...Ch. 8 - LO.2 Andre acquired a computer on March 3, 2019,...Ch. 8 - LO.2, 3 Diana acquires, for 65,000, and places in...Ch. 8 - LO.3 McKenzie purchased qualifying equipment for...Ch. 8 - LO.4 On April 5, 2019, Kinsey places in service a...Ch. 8 - LO.7 On October 1, 2019, Priscilla purchased a...Ch. 8 - Prob. 29CECh. 8 - Prob. 30CECh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - LO.2 Orange Corporation acquired new office...Ch. 8 - LO.2 Weston acquires a new office machine (7-year...Ch. 8 - LO.2 Juan acquires a new 5-year class asset on...Ch. 8 - LO.2 Debra acquired the following new assets...Ch. 8 - LO.2 On August 2, 2019, Wendy purchased a new...Ch. 8 - Prob. 38PCh. 8 - LO.2 On May 5, 2019, Christy purchased and placed...Ch. 8 - Prob. 40PCh. 8 - Lori, who is single, purchased 5-year class...Ch. 8 - LO.2, 3 Olga is the proprietor of a small...Ch. 8 - LO.2, 3, 9 On June 5, 2018, Javier Sanchez...Ch. 8 - LO.3, 4 Jabari Johnson is considering acquiring an...Ch. 8 - LO.2, 4 On October 15, 2019, Jon purchased and...Ch. 8 - LO.4 On June 5, 2018, Leo purchased and placed in...Ch. 8 - LO.2, 3, 4 On March 15, 2019, Helen purchased and...Ch. 8 - LO.2, 4 On May 28, 2019, Mary purchased and placed...Ch. 8 - Prob. 49PCh. 8 - LO.2, 4, 9 Dennis Harding is considering acquiring...Ch. 8 - LO.2, 5 In 2019, Muhammad purchased a new computer...Ch. 8 - LO.2, 5, 9 Jamie purchased 100,000 of new office...Ch. 8 - Prob. 53PCh. 8 - Prob. 54PCh. 8 - Prob. 55PCh. 8 - Prob. 56PCh. 8 - Prob. 57CPCh. 8 - John Smith, age 31, is single and has no...Ch. 8 - Your client, Daves Sport Shop, sells sports...Ch. 8 - Prob. 2RPCh. 8 - Prob. 3RPCh. 8 - Michael Sima, a sole proprietor craftsman,...Ch. 8 - Cox Construction, a company in its 10th year of...Ch. 8 - Stem Corp. bought a machine in February of year 7...Ch. 8 - Prob. 4CPACh. 8 - Data, Inc., purchased and placed in service a...Ch. 8 - Data, Inc., purchased and placed in service 5,000...Ch. 8 - Which statement below is correct? a. Real property...Ch. 8 - Charlie purchased an apartment building on...
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