John Little who is single is a new client of yours that has come to you with several tax issues with which he needs yourhelp. He is an engineer that has his own practice for which he files a Schedule C and has net income from that of$165,000 for 2021. In addition, he inherited some stock from his mother about 10 years ago for which she paid$4,000, but at her date of death it was worth $25,000. John sold the stock for $42,000 in 2021. Additionally, a friendgifted him a Manet painting valued at $500,000 on June 1, 2019(date of gift), but for which his friend paid nothing as itwas inherited from his great grandmother in 1990. His friend has an appraisal for the painting at the time of his greatgrandmother's death and the value of the painting at her date of death was $200,000. John is thinking of selling thepainting in 2021, but wants your advice as to whether he should sell it this year or next. (Note: John will probably havenet income from his business of about $50,000 in 2022 because he plans to backpack through Europe for about ninemonths in 2022.) During 2021 John also sold a machine for $6,000 that he used in his engineering company that hadan original cost of $32,000 and accumulated depreciation of $32,000. His final question to you relates to the househe lives in which he has maintained as his principal residence since 2005. He is thinking about renting out his house for2022 while he is in Europe and then selling it in 2023 when he returns. He paid $125,000 for the house and put in arecreation room and new kitchen for a cost of $60,000. In addition, he has had the interior and exterior recentlypainted for a cost of $12,000. He thinks he can sell the house for $400,000 in 2023.John wants to know the following:1. What impact do each of the above transactions have on his tax return for 2021? Please refer to specific codesections of the Internal Revenue Code, if appropriate.

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an engineer that has his own practice for which he files a Schedu or 2021. In addition, he inherited some stock from his mother ab at her date of death it was worth $25,000. John sold the stock f Manet painting valued at $500,000 on June 1, 2019(date of gif ed from his great grandmother in 1990. His friend has an apprais er's death and the value of the painting at her date of death was $ 2021, but wants your advice as to whether he should sell it this ye from his business of about $50,000 in 2022 because he plans to (022.) During 2021 John also sold a machine for $6,000 that he cost of $32,000 and accumulated depreciation of $32,000. His fi which he has maintained as his principal residence since 2005 He

an engineer that has his own practice for which he files a Schedu or 2021. In addition, he inherited some stock from his mother ab at her date of death it was worth $25,000. John sold the stock f Manet painting valued at $500,000 on June 1, 2019(date of gif ed from his great grandmother in 1990. His friend has an apprais er's death and the value of the painting at her date of death was $ 2021, but wants your advice as to whether he should sell it this ye from his business of about $50,000 in 2022 because he plans to (022.) During 2021 John also sold a machine for $6,000 that he cost of $32,000 and accumulated depreciation of $32,000. His fi which he has maintained as his principal residence since 2005 He

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2.
Carl made the following transfers during the current year. What are Carl’s taxable gifts for the current year? 1.Transferred $900,000 in cash and securities to a revocable trust, life estate to himself and remainder interest to his three adult children by a former wife. 2.In consideration of their upcoming marriage, gave Maria a $90,000 convertible. 3.Purchased a $100,000 certificate of deposit listing title as “Carl, payable on proof of death to Maria.” 4.Established a joint checking account with his now-wife, Maria, in December of the current year with $30,000 of funds he inherited from his parents. In January of the following year, Maria withdrew $18,000 of the funds. 5.Purchased for $80,000 a paid-up insurance policy on his life (maturity value of $500,000). Carl designated Maria as the beneficiary. 6.Paid $23,400 to a college for his niece Mindy’s tuition and $11,000 for her room and board. Mindy is not Carl’s dependent. 7.Gave his aunt Betty $52,000 for her heart bypass…
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Mr and Mrs. Swerte made the following donations during the calendar year 2018 (common property unless otherwise stated): Date Donations January 15 To Fe, legitimate daughter, on account of her forthcoming marriage, 10,000 shares which are not traded in the stock exchange. The book value at the time of donation was P52 per share. To Juana, family friend of couple, on account of her birthday, P20,000. February 10 To Pilar, legitimate daughter, on account of her marriage on February 1, 2015, a piece of antique jewelry from the capital property of Mr. Swerte. The pawn value of the jewelry was P45,000. To Ernest, legitimate son, on account of her graduation, a piece of land costing P500,000. The fair market value per BIR at the time of adoption was P1,000,000. Its zonal value was P1,200,000. The piece of land had an unpaid mortgage of P100,000 which was assumed by the donee. To Lilian, Mrs Swerte's sister; on account of her forthcoming marriage, cash P150,000 September 4 To CPAR University,…
50. Nicanor, single, received the following in 2022: Proceeds of his life insurance paid at annual premium of P 15,000 within 25 years (outlived the policy) P 2,000,000 Proceeds of Inday’s (Mother of Nicanor) life insurance paid at an annual premium of P 10,000 within 20 years 1,000,000 House and lot from inherited properties 4,000,000 Rent income from inherited properties 200,000 For income tax purposes, how much of the above items must be included in Nicanor’s gross income? Group of answer choices d. 1,825,000 c. 2,200,000 b. 3,200,000 a. 200,000
Nadine bought 100 shares of pie stock for 15$ on March 1.2030. On august 21,2021 she noticed stock has increased in value to 25$ a share. She decided to sell all her shares. Nadine’s only othe income for the year 68000 from wages. She will use the single filing status. Nadine’s revenue from the sale of stock will increase her taxable income by
Deirdre sold 146 shares of stock to her brother, James, for $4,380. Deirdre purchased the stock several years ago for $5,986. What amount of gain or loss does James recognize if he sells the stock for $5,256 and $4234 respectively?
Greta had the following transaction in 2021: a. Carl sold a building in 2021 and generated a $3,000 unrecaptured 1250 gain and a $6,000 LT capital gain. b. Carl sold some old postage stamps he had been collecting since he was a kid at a gain of $5,000. c. Stock purchased on 4/15/21 for $4,000 and sold 11/2/21 for $1,000. d. He sold a potato washing machine that he had used in his business for an ordinary loss of $2,000 e. He sold a personal auto for a long-term loss of $1,000. f. He sold bonds that he purchased back in 2018 for a loss of $10,000. What is the net capital gain or loss and its character?
Mr. A, Filipino, married, died on January 1, 2020 leaving the following: a.) Property inherited from his father who died January 2, 2019: 1. Agricultural land 2. Residential land P 300,000 700,000 b.) Property inherited from his mother who died on November 1, 2014, one day after Mr. A's marriage to Mrs. A. P 400,000 200,000 1. Fish Pond 2. Jewelry c.) Property acquired thru Mr. A's labor 1. Řesidential house and lot used as family home P10,800,000 900,000 2,800,000 2. Motor Vehicles 3. Commercial Land The commercial land has a mortgage of P300,000 of w/c P 200,000 was paid by Mr. A before his death. Also, Mr. A by will bequeathed to the City of Manila for exclusive public purpose the sum of P50,000. The agricultural land and residential land were previously mortgage for P400,000 when inherited whose P150,000 was paid by Mr. A during his lifetime. The estate tax incurred the following expenses a. Funeral Expense b. Judicial Expense c. Claims against the estate P90,000 80,000 250,000…
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Andy, 68, has a gross estate currently valued at $2,500,000 that consists primarily of highly appreciated growth securities. Within the last six months, Andy transferred $500,000 worth of these securities to his wife, Harriet. His cost in these securities was $200,000. Harriet recently died. The fair market value of the transferred securities at the time of her death was $500,000. The securities passed to Andy under the terms of Harriet's will. Which one of the following is an income tax implication of the transfer of stock? A) Andy must recognize $300,000 in capital gain on the stock as of Harriet's death. B) If Andy sells the stock he received from Harriet immediately after her death, his gain, if any, will be deemed to be short-term capital gain. C) Andy's basis in the stock is $200,000. D) Andy's basis in the stock is $500,000.
At the time of her death on October 4, 2016, Kaitlyn was involved in the following transactions. ∙ Was the sole life beneficiary of a trust (assets worth $2 million) created 10 years ago by Paul (Kaitlyn’s husband). The transfer was by gift of securities then worth $500,000 (Paul did not make a QTIP election). Paul and Kaitlyn’s children are the remainder persons. Owned stock in Mauve Corporation (basis of $800,000 and fair market value of $1 million). On September 7, 2016, a dividend of $48,000 was declared on the stock payable to all shareholders on record as of October 3, 2016. The $48,000 was received by Kaitlyn’s executor on October 19, 2016. ∙ Kaitlyn made a taxable gift of $400,000 in 2004. As to these transactions, Kaitlyn’s gross estate includes: