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discussion-Ted, an agent for an airline manufacturer, is negotiating a sale with a representative of the U.S.

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Question;17 Ted, an agent for an airline manufacturer, is negotiating a sale with a representative of the U.S. government and with a representative of a developing country. Ted?s company has sufficient capacity to handle only one of the orders. Both orders will have the same contract price. Ted believes that if his employer authorizes a $500,000 payment to the representative of the foreign country, he can guarantee the sale. He is not sure that he can obtain the same result with the U.S. government. Identify the relevant tax issues for Ted.18. LO.3 Stuart, an insurance salesperson, is arrested for allegedly robbing a convenience store. He hires an attorney who is successful in getting the charges dropped. Is the attorney?s fee deductible? Explain.19. LO.3 Linda operates a drug-running operation. Which of the following expenses that she incurs can reduce taxable income?a. Bribes paid to border guards.b. Salaries to employees.c. Price paid for drugs purchased for resale.d. Kickbacks to police.e. Rent on an office.f. Depreciation on office furniture and equipment.g. Tenant?s casualty insurance.h. Utilities.20. LO.3 Gordon anticipates that being positively perceived by the individual who is elected mayor will be beneficial for his business. Therefore, he contributes to the campaigns of both the Democratic and the Republican candidates. The Republican candidate is elected mayor. Can Gordon deduct any of the political contributions he made?21. LO.3 Melissa, the owner of a sole proprietorship, does not provide health insurance for her 20 employees. She plans to spend $1,500 lobbying in opposition to legislation that would require her to provide such insurance. Discuss the tax advantages and disadvantages of paying the $1,500 to a professional lobbyist rather than spending the $1,500 on in-house lobbying expenditures.22. LO.3 What limits exist on the deductibility of executive compensation? Do the limits apply to all types of business entities? Are there any exceptions to the limitations?Explain.23. LO.3 Paul operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for a market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Paul?s investigation of the business.a. Paul deducts the $7,000 of expenses.b. Paul cannot deduct any of the $7,000 of expenses.c. Paul deducts $5,000 of the expenses and amortizes the $2,000 balance over a period of 180 months.

 

Paper#41303 | Written in 18-Jul-2015

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