what is Paul's taxable income for 2013? A). $90,000 B). $210,000 C). $315,000 D). $405,000
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Paul is a lawyer who left a national law firm to start his own law practice as a sole proprietor on June 1,2013. Paul is working on a large lawsuit on a contingency basis, whereby he will be entitled to 30% of the $1 million amount if the lawsuit is successful, which is expected to be determined in June 2014. From June 1 to December 31,2013, Paul worked 650 hours on the contingency-based lawsuit and 400 hours on other clients, all of which have paid him in full Paul's charge out rate is $300 per hour and his 2013 employment income from the national law firm was $90,000. Assuming no other income or deductions, what is Paul's taxable income for 2013?
A). $90,000
B). $210,000
C). $315,000
D). $405,000
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- During the last five months of the year, Dwana opens a new Internet telecommunications business called Dwan-Com. Dwan-Com bills 50,000 of revenues, but receives only 40,000 cash. Dwan-Com incurs 3,000 of supply expenses, and 41,000 of labor costs. Dwan-Com pays for 2,200 of the supplies and 38,000 of the labor costs in the current year. a. What is Dwan-Coms taxable income if it elects the cash method of accounting? b. What is Dwan-Coms taxable income if it elects the accrual method of accounting? c. What method of accounting do you recommend that Dwan-Com elect?Hassad owns a rental house on Lake Tahoe. He uses a real estate firm to screen prospective renters, but he makes the final decision on all rentals. He also is responsible for setting the weekly rental price of the house. During the current year, the house rents for 1,500 per week. Hassad pays a commission of 150 and a cleaning fee of 75 for each week the property is rented. During the current year, he incurs the following additional expenses related to the property: a. What is the proper tax treatment if Hassad rents the house for only 1 week (7 days) and uses it 50 days for personal purposes? b. What is the proper tax treatment if Hassad rents the house for 8 weeks (56 days) and uses it 44 days for personal purposes? c. What is the proper tax treatment if Hassad rents the house for 25 weeks (175 days) and uses it 15 days for personal purposes?Sam Smith is currently employed as a mechanical engineer and is paid$65,000 per year plus benefits that are equal to 30 percent of his salary. Sam wants to begin a consulting firm and decides to leave his current job.After his first year in business, Sam’s accountant informs him that he hasmade $45,000 with his consulting business. Sam also notices that he paid$6,000 for a health insurance policy, which was his total benefit during hisfirst year. What was Sam’s opportunity cost?
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- Andile, 77 years of age, is a Senior Manager at Blue V, a small - medium sized manufacturing company in the center of Durban. He earns a monthly salary of R32 500 until 31 December 2023, when he decided to retire due to health complications. Andile also received monthly local interest R1 250 from his investment and R70 000 gross dividends from a foreign company. Andile also received R1 000 monthly commission until 31 December 2023 and R 13 500 once-off bonus from his employer up on retirement. Andile also received R3.000 quarterly local dividends Required calculate taxable income for this emlloyee for the year ended 29 February 2024. Using a basic formulaforr calculationoff income tax TableJane Doe moved from Victoria to Vancouver for an internal transfer requested by her employer on October 1, 2020. Prior to relocation, she spent $1000 on a house hunting trip to Vancouver and ended up signing a one-year lease for an apartment in Vancouver after an unsuccessful bid for a house. The cost of sales of her old residence in Victoria, including legal fees and brokerage fees, totaled $7,200. The actual moving costs were $13,000. Jane’s employer agreed to pay $8,000 for her moving costs. Jane’s salary for 2020 was $48,000 (assume her monthly salary is the same throughout the year). Required: Calculate Jane’s maximum moving expense deduction for 2020. Please also indicate the carry forward amount, if any.Heather owns all of the shares of Thompson Consulting Ltd (TCL), an IT consulting firm with 10 employees. TCL has a December 31 st year-end. Heather delegates all of her oversight tasks to various managers because she is busy at home raising her family. On July 25, 2011, Heather borrowed $100,000 from TCL for the purchase of a new home on a non-interest bearing basis. A loan agreement is in place that requires her to repay the full amount in five years. She has never reported anything on her personal income tax return from the loan. Assuming that you are preparing Heather's personal tax return for the first time, which of the following statements is correct? A). There are no income tax consequences because the funds were borrowed for the purchase of a home and there is a bona fide arrangement to repay the loan. B). Heather will have a deemed interest benefit in 2011,2012 and 2013. C). Heather will have an income inclusion of $100,000 in 2013 and a deemed interest benefit in 2011, 2012…
- On July 1, 2020, Ben entered a litigation case with Yona over unauthorized use of Yona’s latest technology. On September 1, 2020, Ben’s lawyers estimated that there is a 70% probability that Ben will lose in the next hearing that will be held on February 2, 2021. Ben stood to pay a maximum of $1,000,000 penalty by the court if proven guilty. Instructions: a. Why should Ben report this case on its Statement of financial position? b. How is the impact of this litigation Ben’s financial statement for 31 December 2020? c. If, October 15, 2020, the legal team finds new evidence for the claim against Ben, and revise the likelihood of Ben winning the case to 70%, how should this be shown in the financial statements?Josaline, the owner of a construction company, is planning to purchase specialized equipment to complete a contract awarded to her company. The first cost of the equipment is $250,000 with a life of 3 years at which time she will no longer need the equipment. The operating cost is expected to be $75,000 per year. Alternatively, a subcontractor can perform the work for $175,000 per year. Because the equipment is specialized, Josaline is notsure about the salvage value. She estimates a likely salvage of $90,000, but it might have to be scrapped for as little as $10,000 in three years. TheMARR is 15% per year.a. Is her decision to buy the equipment sensitive to the salvage value?b. Determine the salvage value at which the two alternatives break even.Julie Andrews was severely injured after she fell into an open manhole in the city. She is suing the Department of Roadworks. Testimony was provided in the trial that Julie will be unable to work for five years. The jury is considering the damages that should be awarded to Julie and will include the following: (a) The present value of the last two years' pay. Julie Andrews' annual salary for the last two years would have been $53,000 and $56,000, respectively. (b) The present value of five years' future salary. Julie Andrews' salary is assumed to be $59,000 per year. 4 (c) $180,000 for her injuries. (d) $25,000 for her legal costs. Assume that her salary is paid in equal amounts at the end of each month. The interest rate is an effective annual rate of 11 percent. What is the dollar value of the damages payment to Julie Andrews? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Award
