Question;Rent and Security Deposits 4-25;Billy Dent, as the owner of an;apartment building, receives and makes the following payments during 2012;Received in January 2012 rent that;was $5,000;due in December 2011;Received in December 2012 rent not 4,000;due until January 2013;Security deposit which is to be 500;refunded when tenant vacates the;apartment;How much rental income must Billy;Dent include on his 2012 income tax return?;Divorce Payments 4-32.;Arnold and Barbara Cane were;divorced in June 2012. Pursuant to the divorce decree, Arnold is obliged to;perform as follows;a. Transfer title of their personal;home to Barbara. They purchased the house in 1998 and their basis today is;$400,000. The fair market value of the house is $500,000. The house is subject;to a 25-year, $250,000 mortgage.;b.;Arnold is to continue making payments on the house until it is fully paid off.;In 2012, Arnold made payments totaling $18,000.;c.;Arnold is to make $3,000 per month payments to Barbara. Of this amount one-half;is for child support. The divorce decree further states that alimony is to;cease upon the death of the wife. In 2012, he made six payments.;How do the transactions in the;divorce agreement affect Arnold's and Barbara's taxable income?;Investment Income 5-26.;A. Fluent, an investor in stocks and;bonds, wanted to increase his portfolio but wanted to minimize his tax;liability on the income from the bonds. He is presented with the following;alternative investments: U.S. Series EE bonds, bonds for industrial development;for mass transit, and qualified veterans' mortgage bonds. Which should he;choose for his investment? Why?;Trade or Business Deductions 6-29.;Which of the following trade or;business expenditures of Ajax Inc. are deductible on its current year tax;return? If an expenditure is not deductible, explain why it is not a valid deduction.;Expenditure;Amount;Salaries and wages to;employees;$400,000;Purchase of new office;building;250,000;Payment of illegal;parking fines of;1,400;President;Payment of wedding;expenses for;1,600;President's daughter's;wedding;Entertainment expenses;related to;25,000;company business;Interest on money;borrowed to buy;9,000;tax-exempt securities;Total expenditures;$700,400;Salaries and Wages Deductions 6-34.;For the current month, Jackson;Cement Co. incurred payroll expenses as follows;Gross salaries and;Wages;$675,000;Payroll taxes;OASDI (Social Security;Tax);employer's share;HI (Medicare;tax)-employer's share;9,788;726,638;Amounts withheld and;paid to the government;Employee income taxes;withheld;(108,990);OASDI Employees' share;(41,850);HI-employees' share;(9,788);a.;What amount can Jackson claim as a tax deduction for salary and wage expense?;b.;How much can Jackson deduct as tax expense?
Paper#42012 | Written in 18-Jul-2015Price : $29