Mr Winston entered into an agreement that gave him the right to purchase stationery for R12 000. This stationery normally costs R17 000. Mr Winston has not exercised the option by the end of the year of assessment. Mr Winston will not be able to deduct this amount under the general deduction formula as it was of a capital nature True or False
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Mr Winston entered into an agreement that gave him the right to purchase stationery for R12 000. This stationery normally costs R17 000. Mr Winston has not exercised the option by the end of the year of assessment. Mr Winston will not be able to deduct this amount under the general deduction formula as it was of a capital nature
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- D is indebted to C for P10,000. For the purpose of defrauding C, D sold his only parcel of land to X valued P10,000. X has no knowledge of the intention of D. a. The contract D and X is binding. b. The contract is voidable because S is in bad faith. c. The right of C is to rescind the contract because the transaction is fraudulent. d. The contract between D and X is rescissible.O Sebastian originally sold his home in an installment sale for $300,000. At the time, his adjusted basis in the home was $220,000. He qualified for the Section 121 principal residence exclusion, so his gain was not included in his taxable income for the year of sale. Three years later, he repossessed the home from the buyer when the balance of the note was $275,000. He spent $8,000 on improvements and resold it within the year for $320,000. What is Sebastian's recomputed adjusted basis in the property? $228,000 $258,000 $278,000 $308,000Derek purchases a small business from Art on August 30, 2022. He paid the following amounts for the business: Fixed assets Goodwill Covenant not to compete Total $256,600 51,320 64,150 $372,070 a. How much of the $372,070 purchase price is for Section 197 intangible assets? b. What amount can Derek deduct on his 2022 tax return as Section 197 intangible amortization? If required, round the final answer to the nearest dollar. Use months, not days, in your computations.
- Umair sold some equipment he used in his business on August 29, 2022, that was originally purchased for $60,000 on November 21, 2020. The equipment was depreciated using the seven-year MACRS method for a total of $15.921. Assume there is no additional netting of gains and losses for this taxpayer. Required: a. Assume Umair sold the equipment for $43,000: 1. What is the amount of realized gain or loss on the sale of the equipment? 2. Is the nature of the gain or loss considered ordinary or long-term? b. Assume Umair sold the equipment for $47,000: 1. What is the amount of realized gain or loss on the sale of the equipment? 2. Is the nature of the gain or loss considered ordinary or long-term? Complete this question by entering your answers in the tabs below. Req A1 and B1 Req A2 and B2 al. Assume Umair sold the equipment for $43,000. What is the amount of realized gain or loss on the sale of the equipment? b1. Assume Umair sold the equipment for $47,000. What is the amount of realized…Ferris owns an interest in, but does not materially participate in, an activity. He has $30,000 at-risk. The business produced a loss in the current year and Ferris's share of the loss is $45,000. Assuming Ferris has no passive income, how much of the $45,000 loss will be deductible by Ferris? Multiple Choice $0. $30,000. Cannot be determined. $45,000.Andrea's 2020 return was audited by the IRS. Andrea failed to report taxable interest income on her return, which resulted in an assessment of $8,000 in tax. Assuming her actions were intentional and fraudulent, what is her accuracy penalty?
- Moran owns a building he bought during year 0 for $198,000. He sold the building in year 6. During the time he held the building, he depreciated it by $50,000. What are the amount and character of the gain or loss Moran will recognize on the sale in each of the following alternative situations? Note: Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable. b. Moran received $213,000.Moran owns a building he bought during year 0 for $198,000. He sold the building in year 6. During the time he held the building, he depreciated it by $50,000. What are the amount and character of the gain or loss Moran will recognize on the sale in each of the following alternative situations? Note: Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable. a. Moran received $206,000.Leon sells his interest in a passive activity for $165,500. Determine the tax effect of the sale based on each of the following independent facts: If an amount is zero, enter "0". a. Adjusted basis in this investment is $57,925. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. The The suspended losses at the end of the year are IS b. Assume the same sales price but the adjusted basis in this investment is $124,125. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. The IS The suspended losses at the end of the year are $ The c. Assume the same sales price but the adjusted basis in this investment is $124,125. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. In addition, suspended credits total $16,550. is The suspended losses at the end of the year are $ The suspended credits at the end of the year are
- Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500? (a) Loss of $500. (b) Gain of $4,000. (c) Gain of $4,500 (d) Gain of $5,000.George sold land to an unrelated party in 2018. His basis in the land was $76,000, and the selling price was $228,000—$57,000 payable at closing and $57,000 (plus 10% interest) due January 1, 2019, 2020, and 2021. What would be the tax consequences of the following? Treat each part independently, assume that George did not elect out of the installment method and the installment obligations have values equal to their face amounts. Ignore interest in your calculations. Round the gross profit to three decimal places before converting to a percentage. For example: .48245 would be rounded to .482 and converted to 48.2%. If required, round final answers to the nearest dollar. a. In 2019, George borrowed $22,800 from the bank. The loan was partially secured by the installment notes, but George was personally liable for the loan. Borrowing using the installment notes as security for the debt not a disposition; therefore, the installment sale gain not accelerated. b. In…Mr. X was injured in a vehicular accident in 2018. He incurred and paid medical expenses of P20,000 and legal fees of P10,000 during the taxable year. In 2020, he received P70,000 as settlement from the insurance company which insured the car owned by the other party involved in the accident. From the above payments and transactions, the amount of taxable income in 2020 is? a. P70,000 b. P50,000 c. P40,000 d. zero