Erika has a mining operation. In 2021, she earned 175 coins with a fair market value (FMV) of $250 per coin at the time she received them. She received 11.25 coins at the same time for transaction verifications. She had no other income from the mining. She sold 120 of the coins for $265 per coin a month later. Her deductible expenses for the mining operation were $12,000. Finally, she earned ten coins for interest with an FMV of $2,300 total. How much net income does Erika show on her Schedule C?
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- Betty borrowed $200,000 at an interest rate of 10% p.a. from XYZ bank to purchase the goodwill, premises, equipment and stock of a cookware shop. As security for the loan, she was required to mortgage her holiday home. Please discuss, with reference to case authority, whether the purchase of the goodwill, premises, equipment and stock would be deductible?Shellie, a single individual, received her Bachelor's degree in 2020, and took a job with a salary of $45,000 per year. In 2021, she paid $1,500 of interest on qualified education loans. Which of the following statements is correct? a.If her payment had been $3,000, only $2,000 would have been deductible in arriving at AGI and the $1,000 excess would have been treated as nondeductible consumer interest. b.Taxpayers are not allowed a deduction for education loan interest in 2021. c.If her income had been $65,000, the deductible amount would have been phased out. d.The full $1,500 is deductible in arriving at adjusted gross income (AGI).During 2021 Jean underwent the following transactions: $100,000 for pain and suffering and $20,000 in punitive damages related to a workplace injury she suffered in 2020. Received 12 payments from an annuity in the amount of $3,000 a month for a total of $36,000. She originally purchased the annuity contract for $200,000 and began receiving payments when she turned 60 years old. Won a car with a fair market value of $30,000. Required: How much did Jean’s 2021 gross income increase as a result of the above transactions?
- Tin rents her beach house for 60 days and uses it for personal use for 30 days during the year. The rental income is $6,000 and the expenses are as follows: Mortgage interest $9,000 Real estate taxes 3,000 Utilities 2,000 Maintenance 1,000 Insurance 500 Depreciation (rental part) 4,000 Using the IRS approach, total expenses that Tin can deduct on her tax return associated with the beach house are: a.$6,000. b.$0. c.$8,000. d.$12,000.Faisal has insured his vehicle with AXA insurance company. Throughout the year he experiences a loss in January costing 1,154, another in May costing 1,255 and the last in December costing 1,292. If Faisal has a straight deductible of 824. How much will the insurer pay?Elsie had an AGI of $105,000 in 2018. All of her income was from wages. Elsie owned a rental house and actively participated in the management of the rental house. The rental house generated losses of $25,000 in 2018. Elsie has over $100,000 at risk. What amount of the $25,000 loss can Elsie deduct in 2018?
- Faisal has insured his vehicle with AXA insurance company. Throughout the year he experiences a loss in January costing 1,577, another in May costing 1,284 and the last in December costing 1,102. If Faisal has an aggregate deductible of 2,574. How much will the insurer pay?During 2020, Jackie sent her brother Junnie $2,500 via a telegraphic transfer through El Banco Prieto. The bank’s remittance clerk made a mistake and credited Junnie with $250,000 which he promptly withdrew. The bank demanded the return of the mistakenly credited excess, but Junnie refused to do so. The BIR entered the picture and investigated Junnie. Would the BIR be correct if it determines that he earned a taxable income under the facts? No, it was not her fault that the funds in excess of $2,500 were credited to him. Yes, income is a taxable income regardless of the source No, he had no income because he had no right to the mistakenly credited funds. No, the funds in excess of $2,500 were in effect donated to her.Betty borrowed $200,000 at an interest rate of 10% p.a. from XYZ bank to purchase the goodwill, premises, equipment and stock of a cookware shop. As security for the loan, she was required to mortgage her holiday home. Please discuss whether the interest would be deductible
- During 2021 Jean underwent the following transactions: $100,000 for pain and suffering and $20,000 in punitive damages related to a workplace injury she suffered in 2020. Received 12 payments from an annuity in the amount of $3,000 a month for a total of $36,000. She originally purchased the annuity contract for $200,000 and began receiving payments when she turned 60 years old. • Won a car with a fair market value of $30,000. Required: How much did Jean's 2021 gross income increase as a result of the above transactions?Jos is a Sales Manager. He uses his own car to travel to various locations. He acquired the car on 1 October 2021 for $60,000. The acquisition cost was funded entirely by a loan at an interest rate of 15%. He has determined that the depreciation deduction on the car would be $2,300 for the year. In addition, Jos incurred the following expenses during the year: Registration and insurance = $2,000; Repairs and maintenance = $1,000; and Oil and fuel costs = $1,500. For the period 1 October 2021 to 30 June 2022, Jos estimates that the car travelled 15,000 kilometres, 12,000 of which were for business purposes. You may assume that Jos has maintained all necessary records and a logbook. Required: Calculate Jos's deduction for car expenses under the two methods (cent per kilometre rate 0.72 and logbook) in Div 28 of Income Tax Assessment Act 1997. Assume that depreciation has been adjusted for part-year use and the impact of the car limitIsla runs a bicycle shop in Wellington. During the tax year ending 30 June 2021, her records indicate: Receipts: 135,000 Bicycle Sales 35,000 Spare parts and accessory sales 15,000 Compensation receipt (see note A) 250,000 Proceeds for sale of land (see note B) 1,000 Net interest received from an overseas interest-bearing term deposit (see note C) 5,000 Exempt Income 6,000 Cash dividend income (see note D) 25,000 Net salary and wages (see note E) Payments: 55,000 Purchases of bicycles, spare parts and accessories (see note F) 12,000 Materials (see note G) 39,000 Utilities and rent for the business premises 3,000 Repairs to storage room 1,000 Donation to Oxfam (Deductible gift recipient) ADDITIONAL INFORMATION: (A) - Compensation for damaged trading stock after a storage room was broken into (B) - Isla sold some land purchased in 1984 for $85,000. In 2002 Isla spent $15,000 building new fences for 85% of the boundary after a fire damaged the…