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##### Tax 4001 Rosenthal Fall 2014 Homework Set -Spartan Corp?s

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Question;1. Spartan Corp?s interest and gain on investments for 2014 were as follows: -Interest on US Government Bonds \$4,500 -Interest on Bland County School Bonds \$6,000 -Interest on a Virginia income tax refund \$700 -Gain on the sale of Bland County School bond \$8,000 How much of the above is included in Spartan?s Gross Income from tax purposes? 2. Polo Co. had \$425,000 in operating income and \$80,000 in operating expenses during the year. In addition, Polo had a \$12,500 LTCG and a (\$32,000) STCL. What is Polo?s taxable income? 3. Amy owes the bank \$500,000, and is currently having some cash flow problems. Therefore, in full satisfaction of debt, she gives the bank land with a FMV of \$415,000 (Basis of \$245,000). What is the amount and character of income that Amy must recognize as a result of this transaction? 4. Right House Networks allows its customers to pay by the year in advance (\$800), or two years in advance (\$1500). In September 2013, the company collected the following amounts for future services: Oct. 2014- Sept 2016 (Two-year contracts) \$150,000 Oct. 2014- Sept 2015 (One-year contracts) \$ 65,000 Calculate the amount of the above that would be included in Right House Networks taxable income in 2014, 2015 and 2016, respectively assuming: a) Right House recognizes income on the cash basis. b) Right House recognizes income on the accrual basis 5. Paul had the following transactions in 2014: STCG on sale of stock \$5,000 LTCG on sailboat (for pleasure) 2,500 LTCL on power boat (for pleasure) (21,000) LTCG on real estate held for three years for investment 12,000 a. If Paul was in the 28% tax bracket, how much income tax would he owe as a result of these transactions? b. If Paul was in the 15% tax bracket, how much income tax would he owe as a result of these transactions?

Paper#38353 | Written in 18-Jul-2015

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