|
Particulars |
Value |
|
Tax free interest rate |
3.50% |
|
tax rate |
28% |
|
Tax equivalent yield |
4.86% |
From the above valuation the relevant return from tax free interest rate is only 4.86%, while taxable corporate bond pays a return of 6%, which is higher. Therefore, the investment needs to be conducted in taxable corporate bond.
According to the ruling leaving Dwayne and Carol the other two people could claim for Jane. Carol cannot claim for Jane, as she is not related, whereas the relevant expenses of Dwayne is not more than 10% and bares him for claiming Jane. The other two individual Jack or Emma, any one could claim Jane for the taxpayer exemption.
Before Jack claims for Jane relevant Form 2120 needs to be filled, which states the exemption of multiple support agreement that is filed.
From the relevant case scenario, no one can claim head of household status based on Janes’ dependency, as the individual needs to provide more than half of the support measure.
After evaluating the case it is detected that Jack cannot claim for old age allowance for his mother, as the allowance mainly increases the relevant amount of standard deductions. Moreover, the old age allowance is not available for dependents, which will restrict Jack claim the allowance.
- Parent has $0 recognized loss and child has $1,500 recognized gain.
|
Particulars |
Value |
|
Fair market value of car before hurricane |
11,000 |
|
Fair market value of car after hurricane |
6,900 |
|
Decrease in fair value |
4,100 |
|
Less reduction |
100 |
|
Less adjusted gross income |
3,000 |
|
Deductible casualty loss |
1,000 |
|
Particulars |
Value |
|
Activity A |
$ 40,000.00 |
|
Activity B |
$ (30,000.00) |
|
Activity C |
$ (25,000.00) |
|
Net passive loss carryover |
$ (15,000.00) |
|
Particulars |
|
|
Loss Carryover |
Deductible loss |
|
Activity B |
$ (15,000.00) |
$ 0.60 |
$ (9,000.00) |
$ 39,000.00 |
|
Activity C |
$ (15,000.00) |
$ 0.50 |
$ (7,500.00) |
$ 32,500.00 |
The carrying loss of $15,000 is mainly offset by the income generated by each activity, whereas the Activity loss of activity B totally offset, while the loss from activity C is carried forward.
|
Particulars |
Value |
|
Purchase of assets |
$ 200,000 |
|
Auto |
$ 45,000 |
|
Cash |
$ 85,000 |
|
Capital loss |
$ 70,000 |
- $500,000
|
Particulars |
Value |
|
Sally’s office building |
740,000 |
|
liability |
150,000 |
|
|
890,000 |
|
Sally’s liability |
95,000 |
|
Walters warehouse |
500,000 |
|
|
595,000 |
|
Gain from Walter |
295,000 |
|
basis in office building |
500,000 |
- $30,000
|
Particulars |
Value |
|
Self-supporting |
|
|
Salary |
$ 3,600.00 |
|
Interest income |
$ 1,800.00 |
|
AGI |
$ 5,400.00 |
|
Standard deduction |
$ (6,300.00) |
|
Personal exemption |
$ (4,050.00) |
|
Taxable income |
$ (4,950.00) |
|
Taxable income |
$ 0 |
|
Particulars |
Value |
|
Dependent of his parent |
|
|
Salary |
$ 3,600.00 |
|
interest income |
$ 1,800.00 |
|
AGI |
$ 5,400.00 |
|
Standard deduction |
$ (6,300.00) |
|
Taxable income |
$ (900.00) |
|
Taxable income |
$ 0 |
The standard deduction will give higher deduction.
|
Particulars |
Amount |
Amount |
|
Salaries |
$ 105,000.00 |
|
|
Add interest income |
$ 2,000.00 |
|
|
Gross income |
|
$ 107,000.00 |
|
Less adjustments |
|
|
|
IRA contribution |
$ (10,000.00) |
|
|
medical expenses |
$ – |
|
|
mortgage interest |
$ (12,000.00) |
$ (22,000.00) |
|
Gross income adjusted |
|
$ 85,000.00 |
|
Itemized deductions |
|
|
|
State income tax paid |
$ 5,000.00 |
|
|
Charitable contribution made |
$ 5,000.00 |
|
|
Total itemized deduction |
$ 10,000.00 |
|
|
Standard deduction |
|
$ (12,600.00) |
|
|
|
$ 72,400.00 |
|
Less: personal exemption |
|
$ 12,000.00 |
|
Taxable income |
|
$ 60,400.00 |
|
Add: Capital loss realised |
|
$ 3,000.00 |
|
Total taxable income |
|
$ 63,400.00 |
The overall medical expense is zero, as it needs to be more than 10% of AGI. Moreover, the standard deduction is greater, while the max allowed capital loss is $3,000.
|
|
Particulars |
Value |
|
a) |
Salary |
62000 |
|
|
short term capital loss |
3000 |
|
|
Adjusted gross income |
59000 |
|
b) |
Standard deduction |
6300 |
|
|
Taxable income |
52700 |
|
c) |
Tax liability |
8968.75 |
|
Particulars |
Value |
|
Rented Days |
90 |
|
Total number of used |
118 |
|
For AGI |
|
|
Insurance |
$610.17 |
|
Repairs & maintenance |
$457.63 |
|
Mortgage interest |
$2,669.49 |
|
Property taxes |
$1,144.07 |
|
Utilities |
$686.44 |
|
Total deductions |
$5,567.80 |
|
Depreciation |
$9,915.25 |
Deprecation is relevantly higher than the deduction, which will carry forward the amount of $4,347 to net year for adjustment.
The basis of the condominium is reduced by $5,568.
|
Particulars |
Amount |
Amount |
|
AGI |
|
$68,000 |
|
Expenses: |
|
|
|
Auto Interest |
1,500 |
|
|
Mortgage interest |
4,250 |
|
|
Hospital Bills |
10,300 |
|
|
Health Premiums |
$1,000 |
|
|
Transportation |
200 |
|
|
Doctor bills |
15,700 |
|
|
Physical therapy |
5,000 |
|
|
Total medical expenses |
$37,950 |
|
|
Less: Insurance reimbursement |
15,000 |
|
|
Total expense |
|
$22,950 |
|
Taxable Income |
|
$45,050 |
|
Particulars |
Value |
|
Selling shares |
120 |
|
Selling price |
$ 70.00 |
|
Sale value |
$ 8,400.00 |
|
Less cost of stock |
$ 6,000.00 |
|
Long term capital gain |
$ 2,400.00 |
|
Particulars |
Value |
|
Sale |
$ 100,000 |
|
land cost |
$ 60,000 |
|
GP |
$ 40,000 |
|
GP% |
40% |
|
Jonson paid |
$ 20,000 |
|
Gross income to be included |
$ 8,000 |
|
Particulars |
Value |
|
Taxable income |
$ 80,000.00 |
|
sales of stock |
$ (15,000.00) |
|
Income taxed |
$ 65,000.00 |
|
Tax on income ordinary |
$ 10,572.50 |
|
Particulars |
Value |
|
Taxable income |
$ 80,000.00 |
|
sales of stock |
$ (15,000.00) |
|
Income taxed |
$ 65,000.00 |
|
Tax on income ordinary |
$ 10,572.50 |
|
Tax on preferentially tax income |
$ 1,627.50 |
|
Income tax |
$ 12,200.00 |
- $6,573
|
Particulars |
Value |
|
Land |
$ 45,000.00 |
|
Cash |
$ 1,500.00 |
|
Motorcycle |
$ 3,500.00 |
|
Adjusted basis |
$ 35,000.00 |
|
Recognised gain |
$ 15,000.00 |
|
Particulars |
Value |
|
Taxable income |
$ 160,000.00 |
|
itemised deduction |
$ 30,000.00 |
|
Tax preference |
$ 10,000.00 |
|
AMTI |
$ 200,000.00 |
|
Less exemption |
$ 33,400.00 |
|
Taxable AMT income |
$ 166,600.00 |
|
AMTI |
$ 43,316.00 |
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector: Fourth International Student Edition. WW Norton & Company.
Larson, M. P., Lewis, T. K., & Spilker, B. C. (2017). A Case Integrating Financial and Tax Accounting Using the Balance Sheet Approach to Account for Income Taxes. Issues in Accounting Education, 32(4), 41-49.
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