Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 3, Problem 19P
To determine
Introduction: When goods are sold on credit and
The amount of deduction on bad debtscan be claimed for the $10,000.
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Carrie loaned her friend $4500 to buy a used car. She had her friend sign a note with repayment terms and set a reasonable interest rate on the note because the $4500 was most of her savings. Her friend left town with out a forwarding address, and nobody Carrie knows has heard from her in the last year. How should Carrie treat the bad loan for tax purpose? This is a ___________ bad debt. Assuming this is carries only capital gain or loss, she may claim $____________in the current year and __________any remaining amount.
Rebecca has a loan with 1st Town bank for $5,000. She lost her job several months ago and defaulted on the loan. The bank forgave the $5,000 loan. Prior to the debt forgiveness, she owned $10,000 in assets. Her total liabilities before the debt forgiveness were $12,000. How much will Rebecca have to report as taxable debt forgiveness on her tax return?
Group of answer choices
$0.
$2,500.
$3,000.
$5,000.
Vicky is a physician who uses the cash method of accounting for tax purposes. During the current year, Vicky
bills Pat $1,500 for office visits and outpatient surgery. Unfortunately, unknown to Vicky, Pat moves away
leaving no payment and no forwarding address.
Requirement
What is the amount of Vicky's bad debt deduction with respect to Pat's debt? (Complete the input field. If
there is no bad debt deduction, enter a "0".)
Vicky's bad debt deduction with respect to Pat's debt is
Chapter 3 Solutions
Income Tax Fundamentals 2020
Ch. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Which of the following formulas represents the...Ch. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Heather drives her minivan 953 miles for business...Ch. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Under the high-low method, the federal per diem...
Ch. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - Prob. 13MCQCh. 3 - Prob. 14MCQCh. 3 - Prob. 15MCQCh. 3 - Prob. 16MCQCh. 3 - Prob. 17MCQCh. 3 - Prob. 18MCQCh. 3 - Prob. 19MCQCh. 3 - Prob. 20MCQCh. 3 - Prob. 21MCQCh. 3 - Prob. 22MCQCh. 3 - Prob. 23MCQCh. 3 - Stewie, a single taxpayer, operates an activity as...Ch. 3 - Prob. 2PCh. 3 - Lawrence owns a small candy store that sells one...Ch. 3 - Business with gross receipts of $25 million or...Ch. 3 - Teresa is a civil engineer who uses her automobile...Ch. 3 - Prob. 7PCh. 3 - Martha is a self-employed tax accountant who...Ch. 3 - Prob. 9PCh. 3 - Go to the U.S. General Services Administration...Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Marty is a sales consultant. Marty incurs the...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Cooper and Brandy are married and file a joint...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Cindy operates a computerized engineering drawing...Ch. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Lew is a practicing CPA who decides to raise...
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Similar questions
- Martha is a self-employed tax accountant who drives her car to visit clients on a regular basis. She drives her car 4,000 miles for business and 10,000 for commuting and other personal use. Assuming Martha uses the standard mileage method, how much is her auto expense for the year? Where in her tax return should Martha claim this deduction? _________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________arrow_forwardWade paid 7,000 for an automobile that needed substantial repairs. He worked nights and weekends to restore the car and spent 2,400 on parts for it. He knows that he can sell the car for 13,000, but he is very wealthy and does not need the money. On the other hand, his daughter, who has very little income, needs money to make the down payment on a house. a. Would it matter, after taxes, whether Wade sells the car and gives the money to his daughter or whether he gives the car to his daughter and she sells it for 13,000? Explain. b. Assume that Wade gave the car to his daughter after he had arranged for another person to buy it from his daughter. The daughter then transferred the car to the buyer and received 13,000. Who is taxed on the gain?arrow_forwardThis year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes. (Leave no answers blank. Enter zero if applicable.) a. What amount of deduction for bad debt expense can William claim this year if he uses the accrual method? Deductible amountarrow_forward
- Alex, age 24, had an HSA account set up with her employer, Target, that had $5,000 in the account at the end of the year. She then quit her job in July and withdrew the funds. She had no qualifying medical expenses during 2022. Instead, she used the funds from the HSA to buy a used car she had wanted for a while. What is the tax consequence of this action? Group of answer choices Nothing. Taxpayers are allowed to withdraw from their HSA accounts at any time. Her withdraw is prohibited and will result in a forfeiture of the funds. Alex must pay income tax and a 6% penalty on the withdrawal. Alex must pay income tax and a 20% penalty on the withdrawal.arrow_forwardSherri is a tax accountant. She prepared a large corporate tax return 2 years ago and billed $5,000 to her client. After 2 years of attempting to collect the money, it is clear that she will not be able to collect anything since the business has gone bankrupt. She reports income on her tax return on the accrual basis as she bills it, so the $5,000 was included in her taxable income 2 years ago. Can she claim a bad debt deduction for the $5,000? Explain.arrow_forward
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