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Homework Chapter 4 Essay examples

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Cinthia Gutierrez
Acc 307
Homework Chapter 4

3. Allen visits Reno, Nevada, once a year to gamble. This year his gambling loss was $25,000. He commented to you, “At least I didn’t have to pay for my airfare and hotel room. The casino paid that because I am such a good customer. That was worth at least $3,000. “What are the relevant tax issues for Allen? Allen received something of value from the casino. Under the broad concept of income, the airfare and hotel accommodations would be considered income. However, Allen could argue that the income should be matched with his $25,000 in gambling losses on the trip, and when the income and losses are combined, the net effect is an economic loss

7. Why does the constructive receipt …show more content…

* $1,000 rent for the final two months of the lease and no damage deposit.
b. Which option do you recommend?
The $1,000 prepaid rent is taxed in the year of receipt. The Bluejay Apartments should use the first option. By doing so, it maximizes deferrals without affecting the cash flows
44. Liz and Doug were divorced on July 1 of the current year after 10 years of marriage. Their current year’s income received before the divorce was as follows:
Doug’s salary $41,000
Liz’s salary 55,000
Rent on apartments purchased by Liz 15 years ago 8,000
Dividends on stock Doug inherited from his mother 4 years ago 1,900
Interest on a savings account in Liz’s name funded with her salary 2,400

Allocate the income to Liz and Doug assuming that they live in:
Salary Rent Dividends Interest Doug $41,000 4,000 1,200= $46,200 a. California.
Liz $55,000 8,000 1,200= $64,200
Doug $41,000 4,000 950 1,200= $47,150 b. Texas.
Texas Liz $55,000 4,000 950 1,200= $61,150
Under Texas law, the rents and dividends belong to the community even though this income is derived from separate property. Under California law, the income is community or separate depending on the state law classification of the underlying assets. In this case, the interest is community income because the savings account was funded with community property.
51. Vito is the sole shareholder of Vito, Inc. He is also employed by the

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