Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Iris and Jeong file a joint return. Iris is an executive with a corporation, earning a $800,000 salary. Jeong is a 50% partner in JK Partnership. He works full- time in the partnership. Jeong's basis in his partnership interest at the beginning of the year is $1 million. In the current year, the partnership reports an ordinary loss of $1.2 million, half of which is allocated to Jeong. There were no separately stated items, no distributions made and no changes in liabilities. Iris and Jeong earned $100,000 of dividend income from their investment portfolio. They do not itemize deductions. a. Determine 2018 taxable income for Iris and Jeong. b. Discuss the treatment of any income or loss items not recognized in 2018.

Charades Corporation is a publicly held company listed on the New York Stock Exchange. During the current year, its chief executive officer, Samantha Chen, receives the following compensation from the corporation: salary, $1,500,000; commissions based on sales generated by Samantha, $200,000; payments to a qualified pension plan, $30,000; and tax- free fringe benefits, $20,000. What is the total amount that Charades may deduct?

Assuming AGI below the threshold, a contributor may make a deductible contribution to a Coverdell Education Savings Account for a qualified designated beneficiary of up to $2,000.

Mark, a cash- basis taxpayer, died on September 30, 2018. His wife, Charlotte, provides you with the following information. From January 1, 2018 until his death, Mark received a salary of $35,000. Charlotte received a salary of $68,000 du 2018. Mark had earned commissions of $20,000 which Charlotte received after his death. Charlotte was the benef a $100,000 whole life policy purchased by Mark and a $50,000 group term life insurance policy purchased by Ma employer. The employer had paid premiums of $250 on Mark's behalf. In addition, the corporation paid Charlotte a $10,000 employee death benefit in Mark's name. All employees' families received similar benefits regardless of financial need. Mark and Charlotte had itemized deductions of $25,600. What is the amount of their taxable income on their 2018 tax return?

The oldest age at which the "Kiddie Tax" could apply to a dependent child is

Atlantic Corporation, a calendar- year taxpayer, has $120,000 of accumulated E&P deficit as of January 1. Atlantic's current E&P is $40,000. The corporation makes a $50,000 distribution to its shareholders. Shareholders have stock basis of $60,000. What is the amount of Atlantic's E&P deficit at the end of the year?

Kate subdivides land held as an investment and Section 1237 is satisfied. The lots sell for $30,000 per lot (basis $10,000). Kate sells five lots in the first year. Kate's ordinary income is

If Houston Printing Co. purchases a new printing press during the current year for $30,000, pays sales taxes of $2,000, and pays $1,000 for installation, the cost basis for the printing press is $33,000.

Under the terms of their divorce agreement, Humphrey transferred Corporation H stock to his former wife, Greta, as a property settlement. At the time of the transfer, the stock had a basis to Humphrey of $40,000 and a fair market value of $55,000. What is the tax consequence of this transaction to Humphrey, and what is Greta's basis in the Corporation H stock?

Kayla reported the following amounts in her 2018 tax return: Kayla has generated an NOL of

Carlotta has $50,000 foreign- source income and $150,000 worldwide income. Her U.S. tax on her worldwide income is $30,290, and she paid foreign taxes of $9,000. What is the Carlotta's foreign tax credit?

Mr. Dennis purchased a machine for use in his business. Mr. Dennis' costs in connection with this purchase were follows: What is the amount of Mr. Dennis' basis in the machine?

On May 1 of this year, Ingrid sold her personal residence for $250,000. Commissions on the sale were $20,000. Ingrid also incurred $10,000 of costs for painting and repairs, which were all completed and paid for two weeks prior to the sale of her home. Ingrid's basis in her old home was $180,000. Ingrid's realized gain upon the sale of her first home is

Tonya sold publicly traded stock with an adjusted basis of $76,000 for $90,000. Tonya received a down payment of $15,000 with the balance due in equal payments over the next four years. What is the amount of gross profit to be recognized in the year of sale?

In 2000, Michael purchased land for $100,000. Over the years, economic conditions deteriorated, and the value of the land declined to $60,000. Michael sells the property in this year, when it is subject to a $30,000 nonrecourse mortgage. The buyer pays Michael $34,000 cash and takes the property subject to the mortgage. Michael incurs $5,000 in real estate commissions. Michael's gain or loss on the sale is

When gain is recognized on an involuntary conversion, gain is subject to recapture under Sec. 1245 or Sec.1250.

Costs that qualify as research and experimental expenditures include all of the following except

On December 1, Robert, a cash- method taxpayer, borrows $10,000 from the bank for use in his business. Under the terms of the loan, the bank discounts the loan by $300, paying Robert the $9,700 cash proceeds. If Robert repays the loan next year, he may deduct

Which of the following is not considered support for the dependent support test?

Indie Corporation purchases a building for use in its business at a cost of $100,000. The building was built in 1900 and is a certified historic structure. Indie spends $150,000 on qualifying renovations certified as consistent with the buildings character. Indie will earn a total rehabilitation (historic) tax credit of