Federal Tax Questions
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Get Help Now!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? 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. Federal Tax Questions |
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. Federal Tax Questions
(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?
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