Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 18, Problem 27CE
a.
To determine
Determine the amount of salary D must receive during October 1 through December 31, 2019.
b.
To determine
Determine the amount of limited deduction for salary, the corporation would eligible in the fiscal year ending on September 30, 2020, in order to retain the fiscal year.
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30.
Which of the following statements is CORRECT in regard to compensation expense paid to non-shareholders for an
accrual-basis corporation?
O The corporation may not deduct an excess of $1 million per employee per tax year
If the compensation amount is considered excessive, it may be reclassified as a dividend.
O The corporation may deduct all amounts earned by the employees in the current taxable year as long as it is paid within two and
one-half months after the taxable year-end.
31. Which one of the following statements describes the bad-debt deduction for a corporation?
O The deduction allowed for a specific bad debt is equal to its fair market value
Corporations are allowed a deduction for partial worthlessness of bad debts, but only to the extent the debt has been charged
off.
O if a receivable is not collected by a cash-method corporation, a bad-debt deduction is allowed.
32 Which one of the following statements concerning taxes reported on Form 1120 is CORRECT?
O Federal…
Exercise 15-19 (LO. 3, 4)
Thad, a single taxpayer, has taxable income before the QBI deduction of $194,900. Thad, a CPA, operates an
accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2021, his
proprietorship generates qualified business income of $150,000, W-2 wages of $125,000, and $10,000 of qualified
property.
Assume the QBI amount is net of the self-employment tax deduction.
What is Thad's qualified business income deduction?
9,480 X
0
Required information
[The following information applies to the questions displayed below]
This year, Justin B's share of S corporation income includes $5,000 of interest income, $6,500 of dividend income, and
$45,000 of net income from the corporation's professional service business activity.
a. Assume that Justin B. materially participates in the S corporation. How much of his S corporation income is potentially subject to the
net investment income tax?
S-Corporation income subject to net investment income tax
Chapter 18 Solutions
Individual Income Taxes
Ch. 18 - Prob. 1DQCh. 18 - Prob. 2DQCh. 18 - Prob. 3DQCh. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - LO.2 In 2019, the taxpayer became ineligible to...Ch. 18 - LO.2 Osprey Corporation, an accrual basis...Ch. 18 - Prob. 10DQ
Ch. 18 - Prob. 11DQCh. 18 - Prob. 12DQCh. 18 - LO.2 Emerald Motors is an automobile dealer. The...Ch. 18 - Prob. 14DQCh. 18 - Prob. 15DQCh. 18 - Prob. 16DQCh. 18 - Prob. 17DQCh. 18 - LO.4, 7 In December 2019, Carl Corporation sold...Ch. 18 - LO.2, 5 What are the similarities between the crop...Ch. 18 - Prob. 20DQCh. 18 - Prob. 21DQCh. 18 - Prob. 22DQCh. 18 - LO.6 Largo Company is an engineering consulting...Ch. 18 - Prob. 24DQCh. 18 - Prob. 25DQCh. 18 - Prob. 26DQCh. 18 - Prob. 27CECh. 18 - LO.2 Gaffney Corporation is a wholesale...Ch. 18 - Prob. 29CECh. 18 - LO.2 In 2019, Chaya Corporation, an accrual basis,...Ch. 18 - Prob. 31CECh. 18 - Prob. 32CECh. 18 - Prob. 33CECh. 18 - Prob. 34CECh. 18 - Prob. 35CECh. 18 - Prob. 36CECh. 18 - Prob. 37CECh. 18 - Prob. 38CECh. 18 - Prob. 39PCh. 18 - Prob. 40PCh. 18 - Prob. 41PCh. 18 - In 2018, Juan entered into a contract to write a...Ch. 18 - Prob. 43PCh. 18 - Compute Marys income or deductions for 2019 using...Ch. 18 - What accounting method (cash or accrual) would you...Ch. 18 - Blue Company, an architectural firm, has a...Ch. 18 - How do the all events and economic performance...Ch. 18 - Ross Company is a C corporation providing property...Ch. 18 - Prob. 49PCh. 18 - Prob. 50PCh. 18 - Floyd, a cash basis taxpayer, has received an...Ch. 18 - Prob. 52PCh. 18 - Prob. 53PCh. 18 - On June 30, 2019, Kelly sold property for 240,000...Ch. 18 - Prob. 55PCh. 18 - Prob. 56PCh. 18 - Prob. 57PCh. 18 - Prob. 58PCh. 18 - Prob. 59PCh. 18 - Ostrich Company makes gasoline storage tanks....Ch. 18 - Prob. 61PCh. 18 - Grouse Company is a furniture retailer whose...Ch. 18 - Lavender Manufacturing Company began business in...Ch. 18 - Silver Creek Ranch LLC is a small, family-owned...Ch. 18 - In 2019, Gail changed from the lower of cost or...Ch. 18 - At the end of 2020, Magenta Manufacturing Company...Ch. 18 - Prob. 67PCh. 18 - Prob. 68PCh. 18 - Prob. 69PCh. 18 - Prob. 1RPCh. 18 - Prob. 2RPCh. 18 - Prob. 3RPCh. 18 - Paula has sales that qualify to be reported on the...
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- B Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31,2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1,2020; the interest is not paid until 2021 . How much can B Corporation deduct on its 2019 tax return for these two expenses? $0 $4,000 $15,000 $19,000 $12,000arrow_forward(4) Able is a shareholder in the QRS Corp. QRS has accumulated earnings and profits of $200,000, and current earnings and profits for the year 2019 equal to $300,000. What are the tax consequences to Able if QRS on December 15, 2019 declares a dividend equal to $250,000 payable in equal amounts of $50,000 to Able and the other four shareholders of QRS Corp. on December 27, 2019, if: (a) The amount declared is payable in the common stock of QRS? (b) Able and his fellow shareholders have the option of having the amount declared paid either in cash or QRS stock, and they all choose to receive additional stock? (c) Able can receive only additional QRS stock for his share of the amount declared, and the other four shareholders can receive only cash for their share?arrow_forward9. Norman incorporates the Bates Motel Corporation on February 1, 20x1. The corporation begins its business operations on July 1, 20x1. The corporation is on the calendar year for tax purposes. On February 1, 20x1, the corporation pays $20,000 to its attorney to draft the corporate bylaws. Assuming the corporation files its 20x1 tax return on time and makes a valid election, the corporation’s 20x1 deduction for the $20,000 in costs is (within a couple of dollars of): A. $5,500 B. $5,833 C. $5,916 D. $6,000 E. $20,000 F. None of the above (some other number is correct)arrow_forward
- Which of the following increases the Accumulated Adjustments Account (AAA) of an S Corporation? Cost Of Goods Sold. Nontaxable Life Insurance Proceeds. Tax-Exempt Interest Income. Section 1250 Gains. QUESTION 16 Fannie has been the sole (one hundred percent (100% ) ) shareholder of Beola Corporation, a calendar year S Corporation, since 1981. At end of 2024, Fannie's basis in her stock is $36,800 and she receives a distribution of $44,400 from Beola Corporation. Corporate level accounts of Beola Corporation are as follow: Accumulated Adjustments Account (AAA)- $19,800; Previously Taxed Income (PTI) - $7,300; Accumulated Earnings And Profits (AEP) - $3,600. How is Fannie taxed on the distribution? A $-0- Taxable Dividend and a $-0- Long-Term Capital Gain. A $3,600 Taxable Dividend and a $9,700 Long-Term Capital Gain. A $3,600 Taxable Dividend and a $4,000 Long-Term Capital Gain. A $3,600 Taxable Dividend.arrow_forward0 Required information [The following information applies to the questions displayed below.) Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2019 (effective immediately), in preparation for taking it public. Miley had previously elected S corporation status on January 1, 2018. At the time of the election, the corporation had an accumulated adjustments account balance of $165,000 and $462,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $146,250. During 2020, Miley's corporation reported $0 taxable income or loss. Also, during 2020 the corporation made distributions to Miley of $87,500 and $65,000. How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on November 15, 2020. June 15 November 15…arrow_forwardExercise 15-17 (LO. 3, 4) Thad, a single taxpayer, has taxable income before the QBI deduction of $193,300. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2020, his proprietorship generates qualified business income of $150,000, W–2 wages of $125,000, and $10,000 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. What is Thad's qualified business income deduction?arrow_forward
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