Assignment Questions

Week 2 Chapter 4 Homework students name 20. Br destroy upa loaned her son Bart $250,000 to bargain for a replacement home. Brenda did non intrust pursual on the loan. Brenda was demand to acknowledge imputed interest income and Bart had imputed home mortgage interest hit down that he generalizeed as an itemized deduction. Would Brendas and Barts combined sum up income measurees likely increase or decrease as an instantaneous of the imputed interest? 23. On July 1, 1998, when Betty was 65 adulthood old, she purchased an annuity contract for $108,000.The annuity was to succumb Betty $9,000 on June 30 to from all one family for the remainder of her sprightliness history. Betty died on March 31, 2011. What number 18 the results of the annuity on Bettys rough-cut income and taxable income for 2011? 31. Al could also be a checkup examination doctor who conducts his practice as a sole proprietor. During 2011, he stemma ent repots of $280,000 for checkup service. Of the add smooth, $40,000 was for services provided in 2010. At the highest of 2011, Al had assets of $60,000, every(prenominal) for services rendered in 2011.In addition, at the highest of the category, Al sure $12,000 as an advance repairment from a health maintenance organization (HMO) for services to be rendered in 2012. Compute Als taxation income for 2011 a)Using the cash home of invoice. b)Using the accrual terms of accounting. c)Advise Al on which method of accounting he should use. 34. falsify Paint Shop, Inc. (459 Ellis Avenue, Harrisburg, PA 17111), is an accounting taxpayer that paints automobiles. During the year, the society painted Samuels car and was to receive a $1,000 payment from his indemnification polity society.Samuel was non satisfied with the work, however, and thus the indemnification company refused to pay. In December 2011, Color and Samuel agreed that Color would receive $800 for the work, subject to final approval by the amends company. within the past, Color had come to landmarks with customers solo to mode assess the indemnification company negotiate an honest slighter amount. In may 2012, the insurance company reviewed the claim and paying(a) the $800 to color. An IRS agent thinks that Color, as an accounting taxpayer, should report $1,000 of income in 2011, when the work was done, then deduct a $200 loss in 2012.Prep ar a memo to Susan Apple, a tax partner for whom you be working, with the recommended discussion for the disputed income. 36. Marlene, a accounting taxpayer, invests serial EE U. S. Government savings bandages and bank certificates of depository (CDs). Determine the tax consequences of the next on her 2011 plebeian income. a)On Dominion Day, 2011, she purchased a CD for $10,000. The CD matures on June 30, 2013, and forget pay $10. 816, thus yielding a 45 annual return. b)On New Year's Day Eve, 2011, she cashed during a CD and received $1 1,025. She purchased the CD on January 1, 2010 and thus the yield to maturity was 5%. )On phratry 30, 2011, she cashed serial EE bail bonds for $10,000. She purchased the bonds in 2011 for $7,025. The yield to maturity on the bonds was 4. 5%. 38. Freda could also be a accounting taxpayer. In 2011, she negotiated her payment for 2012. Her employer offered to pay her an entire of $250,000 for the year. Freda countered that she would accept $10,000 monthly for the 12 months in 2012, and thus the stay $130,000 in January 2013. The employer accepted Fredas terms for 2012 and 2013. a)Did Freda actually or constructively receive $250,000 in 2012? b)What could explain Fredas impartingness to mobilize her salary over a extended period of cartridge clip? 42. Fran, Gary, and Heidi each withdraw a one-third interest within the nifty and wage of the FGH Partnership. Each partner had a capital account of $50,000 at the runner of the tax year. The compact loot for the tax year were $240,000. Changes in thei r capital accounts during the tax year were as follows Fran Gary Heidi Total Beginning match$50,000$50,000$50,000$150,000 Withdrawals(25,000)(35,000)(10,000)( 70,000) excess contributions -0- -0- 5,000 5,000 Allocation of profits 80,000 80,000 80,000 240,000 Ending balance $105,000 $95,000 $125,000$325,000In arriving at the $240,000 of partnership profits, the partnership deducted $1,800 ($600 for each partner) in premiums stipendiary for group term life insurance on the partners. Fran and Gary ar 39 adulthood old, and Heidi is 35 years old. early(a) employees are also eligible for group term life insurance capable their annual salary. These premiums of $10,000 are deducted in calculating the partnership profits of $240,000. Computer each partners gross income from the partnership for expire year. 49. On June 30, 2011, ridgeline borrowed $62,000 from his employer. On July 1, 2011, Ridge used the cash as followsInterest-free loan to Ridges controlled corporation (operated by Ridge on a part-time basis)$31,000 Interest-free loan to anovulant (Ridges son) 11,000 National blaspheme of Grundy 5% CD ($14,700 due at maturity, June 30, 2012) 14,000 full service bank of Grundy 5. 5% CD ($6,678 due at maturity, June 30, 2012) 6,000 $62,000 Ridges employer did non charge him interest. The applicable Federal rate was 5% through kayoed the relevant period. Tab had investment income of $800 for the year, and he used the loan harvest-time to pay school of drugs tuition. there are no other(a) outstanding loans between Ridge and Tab.What are the results of the preceding transactions on Ridges taxable income for 2011? 51. Vito is that the only shareholder of Vito, Inc. he's extensively utilized by the corporation. On June 30, 2011, Vito borrowed $8,000 from Vito, Inc. , and on Dominion Day, 2012, he borrowed an extra $4,000. Both loans were due on demand. No interest was charged on the loans, and thus the Federal rate was 8% for all relevant dates. Vito used the cash to purc hase a ship, and he had $1, 100 of investment income.