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

Sycamore Corporation's financial statements show the following items for the current year in its financial accoun records: For tax purposes, depreciation is $22,000. Sycamore owns less than 20% of the company from which it received dividends. Calculate Sycamore's taxable income, tax liability, and carryforwards.

The Roth IRA is an example of the Pension Model.

Which of the following conditions are required for the use of the installment method?

The tax statutes with the popular name "The Internal Revenue Code of 1986" are contained in which Title of the Code?

Pass- through entities include partnerships, limited liability companies, limited liability partnerships, and C corporations.

Lisa loans her friend, Grace, $10,000 to finance a new business. If Grace defaults on the loan, Lisa may take a deduction for a business bad debt in the year of total worthlessness.

In 1998, Congress passed legislation concerning shifting the burden of proof to the IRS. The taxpayer must introduce "credible evidence" to shift the burden of proof to the IRS. What constitutes "credible evidence?"

Raoul sells household items on an Internet website. He receives $3,340 cash and a pair of high- power binoculars from this activity during the year. What tax issues should Raoul consider?

MACRS recovery property includes tangible personal and real property that is used in a trade or business.

Mr. & Mrs. Tsayong are both over 66 years of age and are filing a joint return. Their income this year consisted of following: They did not have any adjustments to income. What amount of Mr. & Mrs. Tsayongs Social Security benefits is t this year?

Jamahl has a 65% interest in a partnership. Jamahl sells land to the JK partnership for $70,000. Prior to the sale, the land had a FMV of $70,000 and an adjusted basis of $90,000 to Jamahl. Two years later, the partnership sells the land for $123,000. Due to the sale, the partnership will recognize

Emma contributes property having a $24,000 FMV and a $15,000 adjusted basis and also renders legal services valued at $22,000 in exchange for a 30% interest in the capital and profits of the ABC partnership. The tax results to Emma will be

For each of the following taxpayers, indicate the applicable filing status and the number of children who qualify child credit. a. Jeffrey is a widower, age 71, who receives a pension of $10,000, nontaxable social security benefits of $12,000 interest of $2,000. He has no dependents. b. Selma is a single, full- time college student, age 20, who earned $6,800 working part- time. She has $1,700 of interest income and received $1,000 support from her parents. c. Olivia is married, but her husband left her three years ago and she has not seen or heard from him since. She supports herself and her six- year- old daughter. She paid all the household expenses. Her income consists of sala $18,500 and interest of $800. d. Ruben is a single, full- time college student, age 20, who earned $6,800 working part- time. He has $250 of interest income and received $10,000 support from his parents. e. Cathy is divorced and received $12,000 alimony from her former husband and earned $35,000 working as an administrative assistant. She also received $2,500 of child support for her daughter who lives with her. Cathy file appropriate IRS form and gave up the dependency exemption to her former husband.

Payments received from a workers' compensation plan funded by employer contributions are taxable.

Where must a tax researcher look to access all Tax Court cases?

Ron's building, which was used in his business, was destroyed in a fire. Ron's adjusted basis in the building was $210,000, and its FMV was $330,000. Ron filed an insurance claim and was reimbursed $300,000. In that same year, Ron invested $240,000 of the insurance proceeds in another business building. Ron will recognize gain of

Longhorn Partnership reports the following items at the end of the current year: What is the partnership's ordinary income? Which items are separately stated?

Taxpayers who change from one accounting period to another must annualize their income for the resulting short period.

Summer exchanges an office building used in her business for another office building. Summer's office building FMV of $250,000 (basis of $180,000). The FMV of the new building is $300,000, and it is subject to a mortgage of $ which is assumed by Summer. Summer also pays the other party $40,000 cash. a. What is the amount of gain realized by Summer? b. What is the amount of gain recognized by Summer? c. What is the basis of the new building to Summer?

In a parent- subsidiary controlled group, the common parent corporation must own more than 50% of the stock of at least one subsidiary corporation.