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TAx problems




Question;Problem 62;Janice Morgan, age 32, is single and has no dependents. She;is a freelance writer. In January 2013, Janice opened her own office located at;22751 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;wants to contribute to the Presidential Election Campaign Fund. During 2013;Janice had 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;Furniture and fixtures (new) costing $21,000 on January 10.;Computer equipment (new) costing $12,400 on July 28.;Janice elected immediate expending under Section 179.;Janice's itemized deductions are as follows;State income tax $3,000;Home mortgage interest 6,000;Property taxes on home 1,500;Charitable contributions 1,200;Janice did not keep a record of the sales tax she paid. The;amount from the sales tax table is $437;Janice has interest income of $20,000 on certificates of;deposit at Second Bank. Janice makes estimated tax payments of $3,00 for 2013.;Compute Janice Morgan's 2012 Federal income tax payable (or;refund due).;Problem 63;John Smith, age 31, is single and has no;dependents. At the beginning of 2014, John started his own excavation business;and named it Earth Movers. John lives at 1045 Center;Street, Lindon, UT, and his business is located at;381 State Street, Lindon, UT. The;ZIP Code for both addresses is 84042. John?s;Social Security number is 111-11-1111, and the business identification number;is 11-1111111. John is a cash basis taxpayer. During 2014, John had the;following items in connection with his business;Fees for services $460,000;Building rental expense 36,000;Office furniture and equipment rental expense 9,000;Office supplies 2,500;Utilities 4,000;Salary for secretary 34,000;Salary for equipment operators 42,000;Payroll taxes 7,000;Fuel and oil for the equipment 21,000;Purchase of three new front-end loaders on January;15, 2014, for $550,000. John made the election under ? 179. 550,000;Purchase of a new dump truck on January 18, 2014;80,000;During 2014, John had the following additional items;Interest income from First National Bank $10,000;Dividends from ExxonMobil 9,500;Quarterly estimated tax payments 11,500;John does not take additional first-year;depreciation.;On October 8, 2014, John inherited IBM stock from;his Aunt Mildred. John had been her favorite nephew. According to the data;provided by the executor of Aunt Mildred?s estate, the stock was valued for;estate tax purposes at $110,000. John is considering selling the IBM stock for;$125,000 on December 29, 2014, and using $75,000 of the proceeds to purchase an;Acura ZDX. He would use the car 100% for business. John wants to know what;effect these transactions would have on his 2014 adjusted gross income.;Write a letter to John in which you present your;calculations. Also prepare a memo for the tax files


Paper#39885 | Written in 18-Jul-2015

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