Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 7, Problem 2DQ
To determine
Explain the amount of classification of Person R’s
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This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently
encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect
to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes.
(Leave no answers blank. Enter zero if applicable.)
%3D
b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method?
Deductible amount
This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently
encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect
to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes.
(Leave no answers blank. Enter zero if applicable.)
a. What amount of deduction for bad debt expense can William claim this year if he uses the accrual method?
Deductible amount
Sally is in the business of purchasing accounts receivable. Last year, Sally purchased an account receivable with a face value of $80,000 for $60,000. During the current year, Sally settled the account, receiving $65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year.
If an amount is zero, enter "0".
Sally's basis in the account receivable is $fill in the blank 1
. Therefore, she has a bad debt deduction of $fill in the blank 2
and income of $fill in the blank 3
.
Chapter 7 Solutions
Individual Income Taxes
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Many years ago, Jack purchased 400shares of Canary...Ch. 7 - Scan is in the business of buying and selling...Ch. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 20DQCh. 7 - Last year Aleshia identified 15,000 as a...Ch. 7 - Prob. 22CECh. 7 - Prob. 23CECh. 7 - Prob. 24CECh. 7 - Prob. 25CECh. 7 - Belinda was involved in a boating accident in...Ch. 7 - Prob. 27CECh. 7 - Prob. 28CECh. 7 - Prob. 29CECh. 7 - Phillis and Trey are married and file a joint tax...Ch. 7 - Emily, who is single, sustains an NOL of 7,800 in...Ch. 7 - Prob. 32PCh. 7 - Monty loaned his friend Ned 20,000 three years...Ch. 7 - Sally is in the business of purchasing accounts...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Olaf lives in the state of Minnesota. In 2019, a...Ch. 7 - Prob. 38PCh. 7 - On July 24 of the current year, Sam Smith was...Ch. 7 - Prob. 40PCh. 7 - During 2019, Leisel, a single taxpayer, operates a...Ch. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Xinran, who is married and files a joint return,...Ch. 7 - During 2019, Rick and his wife, Sara, had the...Ch. 7 - Soong, single and age 32, had the following items...Ch. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Assume that in addition to the information in...Ch. 7 - Jed, age 55, is married with no children. During...Ch. 7 - Prob. 51CPCh. 7 - Mason Phillips, age 45, and his wife, Ruth, live...Ch. 7 - During 2019, John was the chief executive officer...Ch. 7 - Prob. 2RP
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Similar questions
- Vicky is a physician who uses the cash method of accounting for tax purposes. During the current year, Vicky bills Pat $1,500 for office visits and outpatient surgery. Unfortunately, unknown to Vicky, Pat moves away leaving no payment and no forwarding address. Requirement What is the amount of Vicky's bad debt deduction with respect to Pat's debt? (Complete the input field. If there is no bad debt deduction, enter a "0".) Vicky's bad debt deduction with respect to Pat's debt isarrow_forward7. Kamden has a deductible of $1,500. He damages his car in an accident and it will cost $3,900 to repair. How much does Kamden have to pay? How much does his insurance pay?arrow_forwardVella owns and operates an illegal gambling establishment. In connection with this activity, he has the following expenses during the year: Rent Bribes Travel expenses Utilities Wages Payroll taxes Property insurance Illegal kickbacks $33,500 50,250 3,350 20,100 248,000 16,750 1,675 30,150 What are Vella's total deductible expenses for tax purposes?arrow_forward
- Joy incurs the following expenses in her business. When can she deduct the expenses if she uses the accrual method of accounting? the cash method? a. Joy rents an office building for 750 a month. Because of a cash flow problem, she is unable to pay the rent for November and December 2019. On January 5, 2019, Joy pays the 2,250 rent due for November, December, and January. b. Joy borrows 60,000 on a 1-year note on October 1, 2019. To get the loan, she has to prepay 6,200 in interest. c. Joy owes employees accrued wages totaling 20,000 as of December 31, 2019. The accrued wages are paid in the regular payroll on January 5, 2020. d. Joy purchases 2,400 worth of supplies from a local vendor. The supplies are delivered on January 29, 2019. They are fully used up on December 30, 2019. Because of unusual circumstances, a bill for the supplies arrives from the vendor on January 10, 2020, and is promptly paid. e. While at a trade convention, Joy purchases some pens and paperweights to send out as holiday gifts to her clients. She charges the 700 cost to her credit card in December 2019. She pays the credit card bill in January 2020.arrow_forwardSally is in the business of purchasing accounts receivable last year Sally purchased an account receivable with a face value of 83,000 for 60,000. During the current year, Sally settled the account, receiving 65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year.arrow_forward
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