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kaplan AC507 week 2 assignment

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Question;Problem;Assignments38. Kevin;deliberately omitted $40,000 of gross income from the restaurant that he owned;from his 2012 tax return. The return indicates gross income of $ 200,000 when;he files it on April 14 2013. As of what date can the IRS no longer pursue;Kevin with the threat of collection of the related tax, interest, and;penalties?42.When Keith created a new corporation as;a sole shareholder, he was advised by his accountant to treat 50 percent of the;amount invested as a loan and 50 percent as a purchase of stock. What are the;advantages and disadvantages of="msonormal">="msonormal"> this structure as compared with treating the;entire investment as a purchase of stock?;59.Fred Fisher is a;licensed scuba diver who lives in Key Largo. He is employed full-time as an;engineer. Five years ago he had been employed as a professional diver fora salvage;company. While working for the salvage company he became interested in marine archaeology;and treasure hunting. Until last year he gave diving lessons on weekends and;trained individuals in the sport of treasure hunting under the name ?Fred?s;Diving School.? Three of the diving students he taught subsequently found;shipwrecks. Fred generally did not engage in recreational diving.;Last year, Fred began a treasure-hunting;business Named ?Treasure Seekers Company.? He bought a boat specifically;designed for treasure hunting and did extensive research on potential locations;of shipwrecks. Fred located several shipwrecks, but none of substantial value.;He did retrieve several artifacts but has not sold any yet. Although these;artifacts may have some historical significance, they have a limited;marketability. Thus, Fred has not yet had any gross income from his treasure;hunting activities.;Other than retaining check stubs and;receipts for his expenses and encoded log, Fred did not maintain formal records;for Treasure Seekers Company. Fred maintains a few written records as possible;because he fears for his safety. He took steps to keep his boat and equipment;from public view and took precautionary measures to maintain the secrecy of his;search areas. Fred incurred $ 5,000 of expenses relating to his;treasure-hunting activities last year. Can Fred deduct the expenses of his;treasure-hunting business, or will the IRS claim it is a hobby and disallow the;expenses?a salvage;company. While working for the salvage company he became interested in marine archaeology;and treasure hunting. Until last year he gave diving lessons on weekends and;trained individuals in the sport of treasure hunting under the name ?Fred?s;Diving School.? Three of the diving students he taught subsequently found;shipwrecks. Fred generally did not engage in recreational diving. Last year, Fred began a treasure-hunting;business Named ?Treasure Seekers Company.? He bought a boat specifically;designed for treasure hunting and did extensive research on potential locations;of shipwrecks. Fred located several shipwrecks, but none of substantial value.;He did retrieve several artifacts but has not sold any yet. Although these;artifacts may have some historical significance, they have a limited;marketability. Thus, Fred has not yet had any gross income from his treasure;hunting activities.;Other than retaining check stubs and;receipts for his expenses and encoded log, Fred did not maintain formal records;for Treasure Seekers Company. Fred maintains a few written records as possible;because he fears for his safety. He took steps to keep his boat and equipment;from public view and took precautionary measures to maintain the secrecy of his;search areas. Fred incurred $ 5,000 of expenses relating to his;treasure-hunting activities last year. Can Fred deduct the expenses of his;treasure-hunting business, or will the IRS claim it is a hobby and disallow the;expenses?37.;Markum Corporation owes creditor $ 60,000. Markum transfers property to the;creditor to satisfy the debt. Markum purchased the property four years ago for;4 45,000 and it is currently worth $ 60,000. Does Markum have any gross income;as a result of this transaction?="msonormal">="msonormal">48. In year 1;Highrise Company contracts to manufacture a piece of customized equipment for a;customer. The contract will take two years to complete. The contract price is;$250,000 and the company estimates its total costs at $220,000. Actual costs;incurred are as follows;Year 1 $121,000;Year 2 105,000;$226,000;What amount of gross income and deductions does the;company recognize in each of the two years assuming the company uses (1) the;completed contract method, and (2) the percentage of- completion method of;accounting for long-term contracts?;="msonormal">="msonormal">="msonormal">="msonormal">

 

Paper#40630 | Written in 18-Jul-2015

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