ACCT 429 Week 2 Homework

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Product Description 1. (TCOs 1, 2, and 3) Which, if any, of the following taxes are proportional (rather than progressive)? 2. (TCOs 2 and 3) Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil) fuels can be justified by 3. (TCOs 1, 2, 3, and 5) Detroit Corporation sued Chicago Corporation for intentional damage to Detroit's goodwill. Detroit had created its goodwill through providing high-quality services to its customers. Thus, no basis for the goodwill appeared on Detroit's balance sheet. The suit was settled and Detroit received $1,000,000 for the damages to its goodwill. Is the $1,000,000 taxable? 4. (TCOs 1, 2, 3, and 5) On October 1, 2011, Bob, a cash basis taxpayer, gave Dave common stock that paid a dividend of $1,000 on December 15, 2011. On November 15, 2011, the corporation declared the dividend payable to shareholders of record as of November 22, 2011. The corporation has paid the $1,000 dividend once each year for the past ten years, during which Bob owned the stock. When Dave collected the dividend on December 15, 2011, 5. (TCOs 1, 2, 3, and 5) Heather's interest and gains on investments for 2011 were as follows: Interest on Bland County school bonds $500 Interest on U.S. government bonds $600 Interest on a federal income tax refund $100 Gain on the sale of Bland County school bonds $400 What is Heather's gross income based on the above information? 6. (TCOs 4 and 5) Agnes is the sole shareholder of Violet, Inc., for 2011, and she receives from Violet a salary of $200,000 and dividends of $100,000. Violet's taxable income for 2011 is $500,000. On audit, the IRS treats $50,000 of Agnes's salary as unreasonable. Which of the following statements is correct? 7. (TCOs 4 and 5) Which of the following statements is correct in connection with the investigation of a business? 8. (TCOs 4 and 5) Nikeya sells land (adjusted basis of $60,000) to her adult son, Shamed, for its appraised value of $50,000. Which of the following statements is correct? 9. (TCOs 4 and 5) On September 3, 2010, Able purchased § 1244 stock in Red Corporation for $6,000. On December 31, 2010, the stock was worth $8,500. On August 15, 2011, Able was notified that the stock was worthless. How should Able report this item on his 2010 and 2011 tax returns? 10. (TCOs 4 and 5) Dena owns interests in five businesses and has full-time employees in each business. She participates for 100 hours in Activity A, 120 hours in Activity B, 130 hours in Activity C, 140 hours in Activity D, and 125 hours in Activity E. Which of the following statements is correct?

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Product Description 1. (TCOs 1, 2, and 3) Which, if any, of the following taxes are proportional (rather than progressive)? 2. (TCOs 2 and 3) Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil) fuels can be justified by 3. (TCOs 1, 2, 3, and 5) Detroit Corporation sued Chicago Corporation for intentional damage to Detroit's goodwill. Detroit had created its goodwill through providing high-quality services to its customers. Thus, no basis for the goodwill appeared on Detroit's balance sheet. The suit was settled and Detroit received $1,000,000 for the damages to its goodwill. Is the $1,000,000 taxable? 4. (TCOs 1, 2, 3, and 5) On October 1, 2011, Bob, a cash basis taxpayer, gave Dave common stock that paid a dividend of $1,000 on December 15, 2011. On November 15, 2011, the corporation declared the dividend payable to shareholders of record as of November 22, 2011. The corporation has paid the $1,000 dividend once each year for the past ten years, during which Bob owned the stock. When Dave collected the dividend on December 15, 2011, 5. (TCOs 1, 2, 3, and 5) Heather's interest and gains on investments for 2011 were as follows: Interest on Bland County school bonds $500 Interest on U.S. government bonds $600 Interest on a federal income tax refund $100 Gain on the sale of Bland County school bonds $400 What is Heather's gross income based on the above information? 6. (TCOs 4 and 5) Agnes is the sole shareholder of Violet, Inc., for 2011, and she receives from Violet a salary of $200,000 and dividends of $100,000. Violet's taxable income for 2011 is $500,000. On audit, the IRS treats $50,000 of Agnes's salary as unreasonable. Which of the following statements is correct? 7. (TCOs 4 and 5) Which of the following statements is correct in connection with the investigation of a business? 8. (TCOs 4 and 5) Nikeya sells land (adjusted basis of $60,000) to her adult son, Shamed, for its appraised value of $50,000. Which of the following statements is correct? 9. (TCOs 4 and 5) On September 3, 2010, Able purchased § 1244 stock in Red Corporation for $6,000. On December 31, 2010, the stock was worth $8,500. On August 15, 2011, Able was notified that the stock was worthless. How should Able report this item on his 2010 and 2011 tax returns? 10. (TCOs 4 and 5) Dena owns interests in five businesses and has full-time employees in each business. She participates for 100 hours in Activity A, 120 hours in Activity B, 130 hours in Activity C, 140 hours in Activity D, and 125 hours in Activity E. Which of the following statements is correct?

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