A professional engineer who teaches at a university also does consulting astime permits. Her efforts do not conflict with her professorial job and she does this work through her own (one-person) company. Gross income for the year is $207,000; depreciation of equipment is $23,000; expenses such as travel, liability insurance, fees to specialty contractors, rent, and similar expenses are $34,500; and interest on a small loan is $3,500. What is her taxable income? a. $207,000 b. $149,500 c. $192,000 d. $146,000.

A professional engineer who teaches at a university also does consulting astime permits. Her efforts do not conflict with her professorial job and she does this work through her own (one-person) company. Gross income for the year is $207,000; depreciation of equipment is $23,000; expenses such as travel, liability insurance, fees to specialty contractors, rent, and similar expenses are $34,500; and interest on a small loan is $3,500. What is her taxable income? a. $207,000 b. $149,500 c. $192,000 d. $146,000.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 74TA

See similar textbooks

Similar questions

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?
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?
Mary, the vice president in charge of marketing, is provided with a Lexus that the Company has purchased for $78,000. During the current year, this car was driven a total of 25,000 kilometers, of which 18,000 kilometers were employment related. Operating costs for the year amounted to $3,500 and the car was used by Mary throughout the year. Mary paid the Company $200 per month for the use of the car. Calculate the minimum 2020 Taxable benefit for the automobile.
During the current year, Jobul Krist has the following costs: Utilities Maintenance And Repairs Property Taxes House Insurance Interest On Mortgage Repainting And Rewiring The Work Space In The Home Home Internet Service Fees Home Telephone: Monthly Charge Employment/Business Related Long Distance Charges $2,400 4,600 5,200 A. He is an employee with $250,000 in income (no commissions). He is an employee with $250,000 in commission income. B. C. He is self-employed and earns $250,000 in business income. 2,300 7,800 1,000 960 600 390 Mr. Krist is a workaholic with no family, friends, pets, or personal interests. He estimates that he uses 25 percent of his residence and 95 percent of his home phone and home internet service for employment/business related purposes. Maximum CCA on 100 percent of the house would be $12,000. Determine the maximum deduction that would be available to Mr. Krist assuming:
Mike is an independent contractor in 2021. Mike attends a professional trade association in Los Angeles. He spends three days at the meeting and two days vacationing before the meeting. Mike's total expenses for the entire five days include the following: Airfare to and from LA $450 Meals ($50 per day) $250 Hotel ($100 per day) $500 Entertainment of customers (business is discussed) $500 Total = $1700 a. How much can Mike deduce for business related expenses for 2021? b. How would your answers change if Mike spend two days at the meeting and three days vacationing?
Ginny is an accountant by trade, she paid $1,000 each year to join as CPAmember. She also has a knack for programming; hence she also joins theComputer Associates membership for $500 per year as she planned to find a newcareer as a programmer. Discuss her eligibility whether she can deduct bothmembership fees from her assessable income!
Rhea Xu is a self-employed professional singer. She resides in a rented apartment and uses one room exclusively as a business office. This room includes 390 of the 2,600 square feet of living space in the apartment. Ms. Xu performs in recording studios and concert halls, but she conducts all of the administrative duties with respect to the business in her home office. This year, Ms. Xu's apartment rent was $59,000. She paid $6,300 to a housekeeping service that cleaned the entire apartment once a week and $3,100 for renter's insurance on the apartment furnishings. Required: 1. Compute Ms. Xu's home office deduction assuming that her net profit before the deduction was $410,000. 2. Compute Ms. Xu's home office deduction assuming that her net profit before the deduction was $5,100.
Rhea Xu is a self-employed professional singer. She resides in a rented apartment and uses one room exclusively as a business office. This room includes 405 of the 2,700 square feet of living space in the apartment. Ms. Xu performs in recording studios and concert halls, but she conducts all of the administrative duties with respect to the business in her home office. This year, Ms. Xu's apartment rent was $60,000. She paid $6,400 to a housekeeping service that cleaned the entire apartment once a week and $3,200 for renter's insurance on the apartment furnishings. Required: a. Compute Ms. Xu's home office deduction assuming that her net profit before the deduction was $420,000. b. Compute Ms. Xu's home office deduction assuming that her net profit before the deduction was $5,200. Complete this question by entering your answers in the tabs below. Required A Required B Compute Ms. Xu's home office deduction assuming that her net profit before the deduction was $420,000. Home office…
Peggy is an executive for the Tan Furniture Manufacturing Company. She purchased furniture from the company for $9,500, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was $12,500, and Tan's cost was $9,000. The company also paid for Peggy's parking space in a garage near the office. The parking fee was $600 for the year. All employees are allowed to buy furniture at a discounted price comparable to that charged to Peggy. However, the company does not pay other employees' parking fees. Peggy's gross income from the above is: a. $4,100. b. $3,500. O c. $600. O d. $-0-.
Leaf Private College is sponsored by a religious group. Volunteers from this religious group regularly contribute their skilled services to Leaf and are paid nominal amounts to cover their commuting costs. If Leaf did not receive these volunteer services, it would have to purchase similar services. During 2019, the total amount paid to these volunteers was $10,000. The gross value of services performed by them, as determined by reference to layequivalent salaries, amounted to $400,000. What amount should Leaf record as expenses in 2019 for these volunteers’ services?a. $410,000b. $400,000c. $10,000d. $0
For each independent situation, determine the amount, if any that is includible in the gross income of the employee. The employee of a motel has the choice of free lodging on the premises (fair market value $400 per week) or extra cash compensation. He is not required to live on premises. He chooses the lodging. An employee arranges to have his annual bonus, $1,000, paid directly to his son. His objective is to make a wedding gift to the son. An employee earns a salary of $500 per week. Pursuant to a court order, $100 of his salary goes to his ex-wife for child support.
Seved Help Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $560,000. Of this sum, $70,000 Is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $70,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense? b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? (Round your answer to the nearest whole dollar amount.) a. Present value b. Present value