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Federal_Tax_Questions

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Question;1.. Distinguish between realized gains;and losses and recognized gains and losses.;2.Amos, a single individual with;a salary of $50,000, incurred and paid the following expenses during the;year;Medical expenses: $5,000;Alimony: $14,000;Casualty loss (after $100 floor): $1,000;State income taxes: $4,000;Moving expenses: $1,500;Contribution to a traditional IRA: $2,000;Student loan interest: $1,200;Analyze the above expenses and determine which ones are deductible for;AGI. Please support your position.;3. Carl had the;following transactions for 2010.;Salary: $55,000;Damage award (compensatory) for city bus accident: $20,000;Loss on sale of stock investment: $4,500;Loan from father to purchase auto: $10,000;Alimony paid to former wife: $11,000;What is Carl's AGI for 2010?;4. Sara owns a sole;proprietorship, and Phil is the sole shareholder of a C (regular);corporation. Each business sustained a $9,000 operating loss and a $2,000;capital loss for the year. Evaluate how these losses will affect the taxable;income of the two owners.;5. John forms a;corporation and transfers property having a basis to him of $18,000 and a;fair market value of $26,000 to the corporation for 1,000 shares of $10 par;stock. One year later, Hal transfers property having a basis to him of $2,500;and a fair market value of $3,500 for 100 shares of the stock. Hal is not;related to John. The corporation issued no other stock.;(a) How much gain does John recognize on his exchange? What is the basis to;John of his 1,000 shares?;(b) What gain or loss is recognized by the corporation when it issues its;shares to John? What is the basis to the corporation of the property it;received from John?;(c) How much gain does Hal recognize on his exchange? What is the basis to;Hal of his 100 shares?;6. XYZ Company had a net loss of $90,000 from operations;in 2007. Tina owns XYZ and works 20 hours a week in the business. She has a;large amount of income from other sources and is in the 33% marginal tax;bracket. Would Tina's tax situation be better if XYZ were a proprietorship or;a C corporation? Explain why;7. On April 18;2011, Tara Wilson purchased 30 shares of ABC stock for $210, and on September;29, 2011, she purchased 90 additional shares for $900. On November 28, 2011;she sold 48 shares, which could not be specifically identified, for $576, and;on December 8, 2011, she sold another 25 shares for $200. What is her;recognized gain or loss?;8. In 2010, OK Company had a net loss of $82,000 from;operations. Jane owns OK Company and works 20 hours a week in the business.;She has a large amount of income from other sources and is in the 35%;marginal tax bracket. Would Jane's tax situation be better if OK Company were;a proprietorship or a C corporation? Explain why.;9. Bob Smith, a professional basketball player, raises Black;Angus cattle under circumstances that would indicate that the activity is a;hobby. His adjusted gross income for the year is $80,000, and he has $1,000 of;other miscellaneous itemized deductions, all of which are subject to the;two-percent floor. During the taxable year, the feed for the cattle cost;$3,000. The income from the sale of cattle was $2,800.;(a) Under the hobby loss rule, to what extent is the expense of;$3,000 deductible?;(b) Under the two-percent-of-adjusted-gross-income limitation;how much is the overall deductible amount of his itemized deductions?

 

Paper#45408 | Written in 18-Jul-2015

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