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discusion- Discuss the treatment of a loss on rental property under the following facts:




Question;17. Discuss the treatment of a loss on rental property under the following facts:Basis $650,000FMV before the loss 800,000FMV after the loss 200,00018. LO.4 Hazel sustained a loss on the theft of a painting. She had paid $20,000 for the painting, but it was worth $40,000 at the time of the theft. Evaluate the tax consequences of treating the painting as investment property or as personal use property.19. LO.4 Discuss the tax treatment when personal casualty gains exceed personal casualty losses.20. LO.4 Kelly decided to invest in Lime, Inc. common stock after reviewing Lime?s public disclosures, including recent financial statements and a number of press releases issued by Lime. On August 7, 2011, Kelly purchased 60,000 shares of Lime for $210,000. InMay 2012, Lime entered into a joint venture with Cherry, Inc. In November 2012, the joint venture failed, and Lime?s stock began to decline in value. In December 2012,Cherry filed a lawsuit against Lime for theft of corporate opportunity and breach of fiduciary responsibility. In February 2013, Lime filed a countersuit against Cherry for fraud and misappropriation of funds. At the end of December 2013, Kelly?s stock inLime was worth $15,000. Identify the relevant tax issues for Kelly.21. LO.3, 4 In 2010, John opened an investment account with Randy Hansen, who held himself out to the public as an investment adviser and securities broker. John contributed $200,000 to the account in 2010. John provided Randy with a power of attorney to use the $200,000 to purchase and sell securities on John?s behalf. John instructedRandy to reinvest any gains and income earned. In 2010, 2011, and 2012, John received statements of the amount of income earned by his account and included these amounts in his gross income for these years. In 2013, it was discovered that Randy?s purported investment advisory and brokerage activity was in fact a fraudulent investment arrangement known as a Ponzi scheme. In reality, John?s account balance was zero, the money having been used by Randy in his scheme. Identify the relevant tax issues for John.22. LO.5 Discuss the tax treatment of capitalized research and experimental expenditures.23. LO.5 Discuss under what circumstances a company would elect to amortize research and experimental expenditures rather than use the expense method.24. LO.6 Amos began a business, Silver, Inc., on July 1, 2010. The business extracts and processes silver ore. During 2013, Amos becomes aware of the domestic production activities deduction (DPAD) and would like to take advantage of this deduction. Identify the relevant tax issues for Silver, Inc.25. LO.6 The DPAD is unlike other deductions and is designed to provide a tax benefit in a somewhat unique manner. Explain this statement.


Paper#41314 | Written in 18-Jul-2015

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