ACCT 553 ENTIRE COURSE
ACCT 553 Week 1 Homework
Chapter 1 (5 pts)
- Briefly discuss the purpose of the Sixteenth Amendment
Chapter 2 (5 pts)
- Explain the two "safe harbors" available to an Individual taxpayer to avoid a penalty for underpayment of estimated tax.
Chapter 3 (5 pts)
- Explain the distinction between an "above the line" deduction (i.e. FOR AGI) and a below the line deduction (i.e. FROM AGI). Which one is more valuable?
Chapter 13 (5 pts)
- What is an Installment Sale? Is it a form of income "deferral" ? When can't you elect this form of reporting?
ACCT 553 Week 2 Homework
1.Your brother is short on cash and cannot pay his rent this month. You pay his rent for him. Is this taxable income to your brother? Do you get a deduction? (2 pts)
2.Which of the following items would beexcluded from income? (a) $100 bill found under the sugar caddy at the restaurant (b) Inheritance of a car from your grandmother valued at $5,000. (c) Loan from your father-in-law to start your business, (d) Child Support received totaling $16,500. (4 pts)
- Shaun & Kayla earned the following in 2013: Interest on a Savings account of $36, Interest on a U.S. Series EE Savings Bond of $25, Interest on a CD that has not matured yet of $20. How much taxable interest income must they report on their 2013 tax return? (4 pts)
- Explain what a Cafeteria Plan is (hint: it has nothing to do with what you eat between classes
- Explain the limitations placed on the deductibility of Business Gifts? What code section dictates this treatment? (5 pts)
ACCT 553 Week 3 Homework
- In your "own" words, please describe what a "Suspended Loss" is, how it is generated and when it is becomes deductible. (5 pts)
- Please describe "Active Participation" as it relates to a taxpayer's involvement in an investment in Real Estate. (5 pts).
- Macy had a lot of medical expenses this year that were not covered by her insurance (either due to a deductible, co-insurance, or co-pay). Her un-reimbursed qualifying medical expenses total $8,356 and her AGI for 2013 is $45,000. Assuming she will itemize on her 2013 tax return, how much of her medical expenses will she be able to deduct? (5 pts)
- Heather & Terry have a mortgage on their primary residence of $750,000 and a mortgage on their vacation home of $410,000. In 2013, they incurred $46,400 of mortgage interest expense. How much, if any, of that interest is deductible on Schedule A? (5 pts)
ACCT 553 Week 3 Homework ES
- A business bad debt is deductible for tax purposes as a(n):
- Which of the following items is not subject to federal income tax?
- Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift and Sam is neither insolvent nor bankrupt. Which of the following statements is correct concerning the impact of this transaction?
Neither Bob nor Sam has any taxable income from this transaction.
- Jane purchased an annuity contract that pays her $800 per month. The annuity cost her $50,000 and it has an expected return of $100,000. How much of each monthly annuity payment is includible in Jane's gross income?
- Which of the following is not considered "constructive receipt" of income?
Mr.W received a check on December 30, 2009 for services rendered, but was unable to make a deposit until January 3, 2010.
- Stan and Anne were divorced in January 2009. The provisions of the divorce decree and Anne's obligations follow: (1.) Transfer the title in their resort condo to Stan. At the time of the transfer, the condo had a basis to Anne of $75,000, a fair market value of $95,000; it was subject to a mortgage of $65,000. (2.) Anne is to make the mortgage payments for 17 years regardless of how long Stan lives. Anne paid $8,000 in 2009. (3.) Anne is to pay Stan $1,000 per month, beginning in February, for 10 years or until Stan dies. Of this amount, $300 is designated as child support. Anne made five payments of $900 each in 2009 (February-June). What is the amount of alimony from his settlement that is includible in Stan's gross income for 2009?
- To be deductible for tax purposes, a trade or business expenditure must be:
- Mr. Wilson is 66 years old and single. His income for 2009 consisted of the following: Taxable pension $10,000 Taxable interest 9,000 Taxable dividends 5,000 Social security payments 5,000 He did not have any adjustments to income. What amount of W's social security benefits is taxable?
- Explain the Assignment of Income Doctrine (AID) and the "fruit-of-the-tree" doctrine.
- Explain the Constructive Receipt Doctrine.
- Explain the Economic Benefit Doctrine.
ACCT 553 Week 4 Homework
- Please describe the concept of "double taxation" and discuss which entity(ies) are subject to this type of taxation. (5 pts)
- What type of taxpayers are considered "eligible" taxpayers with regard to special ordinary loss treatment of IRC Section 1244 stock? (5 pts.)
- Please describe how the treatment of capital gains(losses) differ for a C Corporation as compared to an Individual. ( 5 pts.)
- Please describe the concept of "Depreciation recapture". ( 5 pts.)
ACCT 553 Week 4 You Decide
Jane Smith Case
How is the $300,000 treated for purposes of federal tax income?
Jane Smith Tax Issues:
(a) What are the different tax consequences between paying down the mortgage debt and assuming a new mortgage debt for federal income tax purposes?
(b) Should John and Jane file separate or joint tax returns?
ACCT 553 Week 5 Homework
- Please explain how Charitable Contributions come into play in determining "Corporate" taxable income. (5 pts)
- What happens to a loss on the Corporate Tax Return (Form 1120)? Does it pass through to the shareholders? Is it available for future or past periods? Please explain in detail. (5 pts.)
- Please describe the purpose of Schedules M-1 and M-3. When is a Schedule M-3 required in lieu of a Schedule M-1. (5 pts.)
- Please define and differentiate a Spin-off, Split-off, and Split-up. ( 5 pts.)
ACCT 553 Week 5 Quiz
- (TCO E) For federal tax purposes, royalty income not derived in the ordinary course of a business is classified as:
- (TCO F) When comparing corporate and individual taxation, the following statements are true, except:
- (TCO H) Al and Amy file a joint return for the 2012 tax year. Their adjusted gross income is $80,000. They had a net investment income of $8,000. In 2012, they had the following interest expenses:
Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $10,000
- (TCO B) Charitable contribution deductions for capital gains property made by individuals without a reduction for long-term capital gains to public charities are limited to:
- (TCO A) The following taxes were paid by Tim:
Real estate taxes on his home: $2,000
State income taxes: $900
State gasoline tax (personal use of automobile): $150
- (TCO F) Hoover, Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and dividends received from a 45 percent-owned domestic corporation of $120,000. Hoover's tax position for the year is:
- (TCO G) All of the outstanding stock of a closely held C corporation is owned equally by David Smith and Steve Bufusno. In 2012, the corporation generates taxable income of $30,000 from its active business activities. In addition, it earns $20,000 of interest from investments and incurs a $40,000 loss from a passive activity. How much income does the C corporation report for 2012?
- (TCO G) Mike, who is single, has $100,000 of salary, $15,000 of income from a limited partnership, and a $30,000 passive loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $100,000. Of the $30,000 loss, how much is deductible?
- (TCO F) Pam owns a sole proprietorship, and Kevin is the sole shareholder of a C (regular) corporation. Each business sustained a $16,000 operating loss and a $2,500 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners?
- (TCO G) Briefly (1) define and (2) discuss the purpose and impact of each of the following:
- net operating loss
b. at-risk rules
- tax shelter
ACCT 553 Week 6 Assignment You Decide
ACCT 553 Week 6 You Decide
Mark, and John Case
Part I: Discuss the various forms of organization that are available to Penelope, Mark, and John
Part II: Make your recommendation as to what form of organization you believe will be best, and be sure to explain the reasoning for your choice.
Part III: Discuss the tax consequences of contributing cash, property, and/or services to the new entity.
ACCT 553 Week 6 Homework
$75,000oftaxableincome.Miyasykemadedistributionsto itsshareholdersof$32,000each,foratotalof$160,000. Eachshareholder'sbasisin theScorporationis$100,000atthebeginningofthetaxyear.Whatamountfrom Miyasykeshould be includedin eachshareholder'sgrossincome?
Asoleproprietorshipincorporatedon January1andelectedScorporationstatus.Theownercontributedthefollowing assetsto theScorporation:
Twoyearslater,thecorporationsoldthemachineryfor$4,000 andthebuildingfor$110,000.Themachineryhad accumulateddepreciationof$2,000,andthebuildinghadaccumulateddepreciationof$1,000.Whatisthebuilt-in gainrecognizedon thesale?
Which ofthefollowingitemsmustbe separatelystated on Form1120S,U.S.IncomeTaxReturnforan S Corporation, ScheduleK-1?
Frankisa1/3shareholderin an Scorporation.Atthebeginningoftheyear,Frank'sbasisin hisScorporationstock was$10,000.Frank'sshareoftheScorporationitemsofincomeincluded$35,000ofincomefromoperations,$1,000 ofcharitablecontributions, and$1,000 ofcapitalgains.Duringtheyear,Frankalsocontributed$15,000ofadditional capitalandreceiveda$3,000 distributionfromtheScorporation.WhatisFrank'sbasisattheendofthetaxyear?
ACCT 553 Week 7 Homework
- Please explain the distinction between a "realized" gain and a "recognized" gain. (5 pts)
- Are there any limits to the deductibility of losses on sales and exchanges between related parties? What code section defines this limitation? (5 pts.)
- What is the basis of property received (i.e. new property) in a like-kind exchange? What is the holding period for the new asset? (5 pts.)
- David purchased stock in Zoll Corporation in 1985 for $6,000. On April 16, 2013 he gifted the stock to his daughter Susan; at the time of the gift, the Zoll stock was valued at $250,000. Susan sold the stock the next month for $ 252,000. What is Susan's gain or loss and what is the character of the gain or loss? ( 5 pts.)
ACCT 553 Final Exam
(TCO E) Zelda Zayer has been a widow for over 3 years and files a return as a single taxpayer. Items of income received by Zelda in 2011 were as follows.
(TCO E) Distinguish between realized gains and losses and recognized gains and losses. (Points : 17)
(TCO F) Describe the current tax law for sale of residence. (Points : 17)
(TCO I) Amos, a single individual with a salary of $50,000, incurred and paid the following expenses during the year.
(TCO G) Briefly describe what "material participation" is. Why is the determination of whether a taxpayer materially participates important? (Points : 17)
(TCO I) Amos, a single individual with a salary of $50,000, incurred and paid the following expenses during the year.
- (TCO I) A review of Bearing's Year 2 records disclosed the following tax information:
Bearing actively participated in the rental property and was a limited partner in the partnership. Bearing had sufficient amounts at risk for the rental property and the partnership. What is Bearing's Year 2 adjusted gross income?
(TCO F) (Becker CPA Review Course, Reg. 1) Smith has an adjusted gross income (AGI) of $140,000 without taking into consideration $40,000 of losses from rental real estate activities. Smith actively participates in the rental real estate activities. What amount of the rental losses may Smith deduct in determining taxable income? (Points : 17
- (TCO B) (Becker CPA Review Course Reg. 3) For the year ended December 31, Year 6, Taylor Corp. had a net operating loss of $200,000. Taxable income for the earlier years of corporate existence, computed without reference to the net operating loss, was as follows:
- (TCO F) (Becker CPA Review Exam Reg. 1) Randolph is a single individual who always claims the standard deduction. Randolph received the following in the current year:
- (TCO H) Alex Smith purchased 30 shares of XYZ stock on April 30, 2010 for $210, and on September 1, 2010, he purchased 90 additional shares for $900. On November 8, 2010, he sold 48 shares, which could not be specifically identified, for $528, and on December 15, 2010, he sold another 25 shares for $50. What is his recognized gain or loss? (Points : 17)
ACCT 553 Midterm Exam
- (TCO C) Under current accounting practice, intangible assets are classified as (Points: 5)
- (TCO C) Which of the following intangible assets should not be amortized? (Points: 5)
- (TCO C) The intangible asset goodwill may be (Points: 5)
- (TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of ten years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is five years. What amount should be reported for patent amortization expense for 2010? (Points: 5)
- (TCO C) During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May's assets when acquired were as follows:
- (TCO D) Which of the following is a condition for accruing a liability for the cost of compensation for future absences? (Points: 5)
- (TCO D) Which of the following taxes does not represent a payroll deduction a company may incur? (Points: 5)
- (TCO D) Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty (Points: 5)
- (TCO D) Jenkins Corporation has $2,500,000 of short-term debt it expects to retire with proceeds from the sale of 75,000 shares of common stock. If the stock is sold for $20 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? (Points: 5)
- (TCO D) Tender Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $500,000. What is the required journal entry as a result of this litigation? (Points: 5)
- (TCO D) If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will (Points: 5)
- (TCO D)When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be (Points: 5)
- (TCO D) Feller Company issues $20,000,000 of ten-year, 9% bonds on March 1, 2010 at 97 plus accrued interest. The bonds are dated January 1, 2010, and pay interest on June 30 and December 31. What is the total cash received on the issue date? (Points: 5)
- (TCO D) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. What is interest expense for 2011, using straight-line amortization? (Points: 5)
- (TCO D) On January 1, Patterson Inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the first year, Patterson should report unamortized bond discount of (Points: 5)
(TCO C) Sisco Co. purchased a patent from Thornton Co. for $180,000 on July 1, 2008. Expenditures of $68,000 for successful litigation in defense of the patent were paid on July 1, 2011. Sisco estimates that the useful life of the patent will be 20 years from the date of acquisition.
(TCO C) Fred’s Company is considering the write-off of a limited life intangible asset because of its lack of profitability. Explain to the management of Fred’s how to determine whether a writeoff is permitted.
- (TCO D) Edwards Co. includes one coupon in each bag of dog food it sells. In return for four coupons, customers receive a dog toy that the company purchases for $1.20 each. Edwards's experience indicates that 60 percent of the coupons will be redeemed. During 2010, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 40,000 coupons were redeemed. During 2011, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed.
- (TCO D) Grider Industries, Inc. issued $6,000,000 of 8% debentures on May 1, 2010 and received cash totaling $5,323,577. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2018. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%.
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