Chapter 1, Problem 25DQ

Sarah wants to start his own sports clothing shop. She doesn’t know if she should set up a company or sole trader.   Discuss with Sarah the considerations of each option. (Tax)

Charlie's Green Lawn Care is a cash basis taxpayer.  Charlie Adame, the sole proprietor, is considering delaying some of his December 2019 customer billings for lawn care into the next year.  In addition, he is thinking about paying some of the bills in late December 2019, which he would ordinarily pay in January 2020.  This way, Charlie claims, he will have "less income and more expenses, thereby, paying less tax!"  Is Charlie's way of thinking acceptable?

Larry is married and has five children. He is worried about the stability of his current employment and does not have a lot of savings. Larry sought out financial advice and he was told to purchase a life insurance policy that provided him with total control over the lifetime benefits, just in case he becomes unemployed. Since his estate is significantly under the estate tax exclusion amount, Larry is not concerned about the policy being included in his gross estate. He plans to name his spouse as the beneficiary to ensure that she, and his children, will be adequately provided for in the event of his death. Which one of the following techniques satisfies Larry's planning objectives?     A) Larry should have a life insurance policy that is owned by an irrevocable trust.     B) Larry should have a life insurance policy that is owned by a revocable trust.     C) Larry should purchase a life insurance policy that names his wife as the insured.     D) Larry should purchase a life…