Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
26th Edition
ISBN: 9781337702621
Author: Kevin E. Murphy, Mark Higgins
Publisher: Cengage Learning
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Tom accepted a written offer from Jill to build a house for Jill. Tom agreed to a price of $800,000. Two months into the construction, Tom realizes that he will barely make a profit on the deal. Tom informs Jill that he will not continue building her house unless Jill agrees to pay Tom an additional $200,000. Jill and Tom agree in writing that Jill will pay Tom an additional $200,000 to complete construction of the house. After Tom completes the construction of the house, Jill refuses to pay Tom the additional $200,000. Tom sues Jill alleging breach of contract with regard to the additional $200,000. Based on the facts stated in this questiona. None of the answers are correctb. Tom will win as long as he is not a minorc. Tom will lose because there was no contract for this $200,000.d. Jill will lose because there was a contract for this $200,000
Dan wishes to purchase an apartment from which he can collect rent before making profit on the
sale of the property in three years’ time. He intends to buy the property in July 2022 and sell it in
July 2025. He has determined that he can afford to purchase a three-bedroom apartment costing
$480,000 and has identified two suitable alternatives as follows;
Address of property 1 Single St, Brisbane 32 Pam Ave, Brisbane
Purchase price (including stamp duty &
legal costs)
$580,000 $580,000
Construction date built in 1971 built in 2001
Construction cost $47,000 $230,000
Depreciable assets (fillings) $7,000 $29,000
Remaining effective life (use Prime cost) 4 years 10 years
Annual maintenance fees $4,500 $4,500
Annual council & water rates $3,000 $3,000
Annual interest on $400,000 mortgage $24,000 $24,000
Annual rental income $31,000 $31,000
Expected selling price in July 2025 $700,000 $700,000
In each case, the values of the fillings and construction costs have been verified by…
The Petersik family is considering purchasing
a second home to use for short term rentals
near the beach. If it purchases the house, they
will place a down payment of $64,000 on the
house. They estimate they will get an annual
net rental profit of $8,500 after their
mortgage and expenses are paid. After 18
years, they plan to pass the rental home along
to their children, so assume the home has
negligible salvage value. What would be the
ERŘ if the Petersik family decides to invest in a
rental home, assuming they keep the home
for 18 years? Assume their MARR is 13%.
Should the Petersik family invest in the rental
home?
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