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Kaplan AC507 unit 2 assignment




Question;Chapter Problem Assignments;Chapter 2;38, 42, 59, and 69;Chapter 3;22, 37, and 48Chapter 2;Problem;Assignments;38. Kevin deliberately omitted;$40,000 of gross income from the restaurant that he owned from his 2012 tax;return. The return indicates gross income of $ 200,000 when he files it on;April 14 2013. As of what date can the IRS no longer pursue Kevin with the;threat of collection of the related tax, interest, and penalties?;Answer;42.When;Keith created a new corporation as a sole shareholder, he was advised by his;accountant to treat 50 percent of the amount invested as a loan and 50 percent;as a purchase of stock. What are the advantages and disadvantages of this;structure as compared with treating the entire investment as a purchase of stock?;Answer;59.Fred;Fisher is a licensed scuba diver who lives in Key Largo. He is employed full-time;as an engineer. Five years ago he had been employed as a professional diver for;a salvage company. While working for the salvage company he became interested;in marine archaeology and treasure hunting. Until last year he gave diving;lessons on weekends and trained individuals in the sport of treasure hunting;under the name ?Fred?s Diving School.? Three of the diving students he taught;subsequently found shipwrecks. Fred generally did not engage in recreational;diving.;Last;year, Fred began a treasure-hunting business Named ?Treasure Seekers Company.?;He bought a boat specifically designed for treasure hunting and did extensive;research on potential locations of shipwrecks. Fred located several shipwrecks;but none of substantial value. He did retrieve several artifacts but has not;sold any yet. Although these artifacts may have some historical significance;they have a limited marketability. Thus, Fred has not yet had any gross income;from his treasure hunting activities.;Other;than retaining check stubs and receipts for his expenses and encoded log, Fred;did not maintain formal records for Treasure Seekers Company. Fred maintains a;few written records as possible because he fears for his safety. He took steps;to keep his boat and equipment from public view and took precautionary measures;to maintain the secrecy of his search areas. Fred incurred $ 5,000 of expenses;relating to his treasure-hunting activities last year. Can Fred deduct the;expenses of his treasure-hunting business, or will the IRS claim it is a hobby;and disallow the expenses?;Answer;69.Go;(the AICPA?s web site) and search forStatements on Standards for Tax Services. Read the history section of the most recent version of theStatements on Standards for Tax Services. What reasons were provided for revising the SSTS?;Answer;Chapter 3;22.Realty;Corporation, an accrual-basis, calendar-year corporation, agrees to rent office;space to tenant Company for $ 3,000 per month beginning on January 1, year 2.;On December 15, year 1, Tenant gives Realty Corporation a $3,000 deposit in addition;to rent for the months of January and February. In year 2, Tenant closes its;business. Realty withholds $1,500 from the deposit for unpaid rent and $1,000;for damages. Realty Corporation refunds the balance of the deposit to Tenant on;May 20, year 2.;Answer;a) How;much income should Realty Corp. report in year 1 from the above-mentioned;transactions for tax and financial accounting?;b) How;much income should Realty Corp. report in year 2? Explain your calculations.;37.;Markum Corporation owes creditor $ 60,000. Markum transfers property to the;creditor to satisfy the debt. Markum purchased the property four years ago for;4 45,000 and it is currently worth $ 60,000. Does Markum have any gross income;as a result of this transaction?;Answer;48. In year 1, Highrise Company contracts;to manufacture a piece of customized equipment for a customer. The contract;will take two years to complete. The contract price is $250,000 and the company;estimates its total costs at $220,000. Actual costs incurred are as follows;Year;1 $121,000;Year;2 105,000;$226,000;What;amount of gross income and deductions does the company recognize in each of the;two years assuming the company uses (1) the completed contract method, and (2);the percentage of- completion method of accounting for long-term contracts?;Answer


Paper#49319 | Written in 18-Jul-2015

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