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kaplan AC507 week 6 assignment 3 and assignment 2




Question;Problem;Assignments;19.Maggie;Brown is a transcriptionist for several doctors in her town and works from her;home. She spends three to four hours per day transcribing medical notes for the;doctors. During the year, she earned $13,200 from the business. She had;automobile expense of $800, phone expense of $150, and child care expense;related to the job of $1,100. Explain how she will report her income and;expenses. Calculate her income from the business and her self-employment taxes;if she has no other income in 2012.22.George;and Georgenne formed the GG Partnership as equal partners. Each partner;contributed cash and property with a value of $100,000 for partnership;operations. As a result of these contributions, George had a basis of $80,000;and Georgenne a basis of $60,000 in their partnership interests. At the end of;their first year of operations, they had the following results:Gross sales $150,000Cost of goods sold 95,000Rent 15,000Salaries to;employees 15,000Utilities 4,000Charitable;contribution 1,000Section 1231 gain 2,000a.;What is;the net income, excluding separately stated items, that each partner is;required to report at the end of the year?b.;How is;each of the separately stated items treated on the partners? tax returns?;c.;What is;each partner?s basis at year-end?63.Clare;and Cora have been making wedding cakes in their homes for several years. The;Health Department;just learned about this and now requires them to shut down or find a commercial;kitchen that can be subject to the proper inspections. Clare and Cora located a;suitable small restaurant they can rent for $1,000 per month or purchase for;$100,000. Their monthly payments would be $1,000 per month for interest and;taxes and $100 per month for the principal on a commercial mortgage if they put;$10,000 down. Clara and Cora each have $10,000 in savings they can put into the;business. Their husbands are also employed and would be able to provide some;support during the start-up period. Both families are in the 28 percent;marginal tax bracket. The women know that the first several years will be;difficult, as they will need to build the business by more than word of mouth.;As a result, their business plan shows losses of $5,000 in the first year;$4,000 in the second year, and $2,000 in the third year, but the fourth year;and beyond show profits. These losses do not include either the rent or the;mortgage payment. How do you suggest they set up their business? Should they;buy or rent the building?Assignment 2 | Sub S Tax Rule;Quiz 1. Which of the following does not affect the basis of S;corporation stock? (Points: 5) Tax-exempt;income Nondeductible;expenses Charitable;contributions Capital gains All affect;stock basis2. Which of the following is not a requirement to make an S;election? (Points: 5) Maximum 100;shareholders One class of;stock Shareholders;must be citizens It must be a;domestic corporation3. Corbin has a $15,000 basis in his 50 percent ownership in;an S corporation and lent the corporation $5,000 last year. The corporation has;$30,000 of other debt. This year the corporation reported a $100,000 loss. How;much of this loss may Corbin deduct? (Points: 5) $15,000 $20,000 $35,000 $50,0004. What is the effect on the AAA if an S corporation;distributes a piece of property valued at $10,000 with a $5,000 basis to 50;percent shareholder and $10,000 cash to the other 50 percent shareholder in a;nonliquidating distribution? (Points: 5) $10,000 net;increase $5,000 net;increase $15,000 net;decrease $20,000 net;decrease5. The S corporation income tax return includes all of the;following except (Points: 5) a Schedule K. an M-1;Schedule. a retained;earnings reconciliation. a;reconciliation of the AAA account.6. Greg and Samantha plan to establish a business in which;they will both materially participate. They are both in the 35% marginal tax;bracket. Although they expect the business to be very successful in the;long-run, they project losses of approximately $100,000 for each of the first;five years. Due to potential environmental concerns, limited liability is very;important for the owners. Which form of business entity should they select;considering both tax and nontax factors? (Points: 5) General;partnership C corporation S corporation It makes no;difference, any of the above should satisfy Greg and Samantha.;="msonormal">="body">="msonormal">="msonormal">


Paper#40729 | Written in 18-Jul-2015

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