Homework Es Week2

According to sec100-50, the net capital gain or net capital loss for the income year is

A corporation cannot use net operating losses between C corporation years and S corporation years, with the only exception that net operating losses from C corporation years can reduce net recognized built-in gains from S corporation years.

Bingo Corporation incurred a net operating loss in 2012. If it carries the loss back, it must first carry the loss back to offset its 2011 taxable income and then it carries any remaining loss back to offset its 2010 taxable income.
 False

Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe uses the accrual method of accounting but he doesn’t keep any significant inventories of the specialized assets that he sells. Joe reported the following financial information for his business activities during year 0. Determine the effect of each of the following transactions on the taxable business income

Which of the following is not a required test for the deduction of a business expense?

Protecting employees against reprisals when they report, in good faith, actions they feel violate the law or these standards.

Date: Name: ID: Answer the following Questions: 1. Tower Inc. owns 30% of Yale Co. and applies the equity method. During the current year, Tower bought inventory costing $66,000 and then sold it to Yale for $120,000. At year-end, only $24,000 of merchandise was still being held by Yale. What amount of inter-company inventory profit must be deferred by Tower? A. $6,480 B. $3,240 C. $10,800 D. $16,200 E. $6,610 2. All of the following statements regarding the investment account using the equity method are true except A. The investment is recorded at cost B. Dividends received are reported as revenue C. Net income of investee increases the investment account D. Dividends received reduce the investment account E.

1. Section 351 (which permits transfers to controlled corporations to be tax deferred) can be justified under the

* The owner is responsible for filing taxes and is allowed to file taxes as part of their personal income taxes.

The equipment can be depreciated by one of two methods: Section 179 allows for a full write off in the year of acquisition (subject to certain limits). MACRS depreciation allows a systematic write off of equipment based on the type of asset. More business assets are either 5 year or 7 year property (CompleteTax, 2012).

better to take a full advantage of reporting the income and report the business expenses as

Choice "d" is correct. Per the above rule, unless an exception exists (and it does not in this case, as Lane's modified adjusted gross income is in excess of $150,000), passive losses may only offset passive income for a tax year (i.e., no "net loss"

If an item meets one of those requirements, the company can deduct the cost of the item during the year in which the item is first used or consumed. If not, the company generally needs to “capitalize the amounts paid to acquire or produce tangible property” under Reg. §1.263(a)-1. However, there is also an exception called de minimis safe harbor election under the Reg. §1.263(a)-1(f). In order to utilize this election, a company must have written accounting procedures in place before January 1, 2014, The written accounting procedures must clarify that for non-tax purposes the company expenses items with the amount paid to a property costing less than a specific amount of money or a property with economic useful life of 12 months or less. The election provides business with the option to expense/deduct annually up to $5,000 per item/invoice if the company has an applicable financial statement (AFS), or up to $500 per item/invoice if the company does not have an AFS. An AFS is defined in

IRC Sec. 213(a) states that “there shall be allowed as a deduction the expenses paid

Under Australian legislation to claim a work related deduction expense it should be directly related to gaining or producing the assessable income and taxpayer must have the spent the money not reimbursed. If the expense incurred for work and private purposes, taxpayer can only claim portion of expense which has been directly related to gain or produce the assessable income usually this is incurred under the home office or home study expenses. (ATO)