Principles Of Taxation For Business And Investment Planning 2020 Edition
Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 3, Problem 9IRP
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Identify the tax issues and state the issues in the form of question.

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Grace is an officer of a local bank that merges with a national bank, resulting in a change of ownership. She loses her job as a result of the merger, but she receives a cash settlement of $590,000 from her employer under her golden parachute. Her average annual compensation for the past five tax years was $200,000. If an amount is zero, enter "0". a. What are the tax consequences to Grace and the bank of the $590,000 payment? The $590,000 payment - considered a golden parachute payment. Therefore, the bank is allowed a deduction of $ Grace has taxable income of $ and is liable for an excise tax of $ b. Assume instead that Grace's five-year average annual compensation was $110,000 and that she receives $390,000 in the settlement. What are the tax consequences to Grace and the bank? The $390,000 payment considered a golden parachute payment. Therefore, the bank is allowed a deduction of Grace has taxable income of $ and is liable for an excise tax of $
Able owns 100% of ABC Corporation, which operates a restaurant. Able founds the corporation with $1,000 in capital. ABC has its own bank account, and Able does not commingle the corporation's funds with his own. ABC has never had a directors' meeting or a shareholders' meeting. ABC does not employ a bookkeeper, and its financial records are incoherent. ABC operates for six months and does not generate a profit. Shortly thereafter, a customer dies of food poisoning due to contaminated ham served by ABC. Can the customer's estate hold Able personally liable for any judgment rendered against ABC?
Heather owns all of the shares of Thompson Consulting Ltd (TCL), an IT consulting firm with 10 employees. TCL has a December 31 st year-end. Heather delegates all of her oversight tasks to various managers because she is busy at home raising her family. On July 25, 2011, Heather borrowed $100,000 from TCL for the purchase of a new home on a non-interest bearing basis. A loan agreement is in place that requires her to repay the full amount in five years. She has never reported anything on her personal income tax return from the loan. Assuming that you are preparing Heather's personal tax return for the first time, which of the following statements is correct? A). There are no income tax consequences because the funds were borrowed for the purchase of a home and there is a bona fide arrangement to repay the loan. B). Heather will have a deemed interest benefit in 2011,2012 and 2013. C). Heather will have an income inclusion of $100,000 in 2013 and a deemed interest benefit in 2011, 2012…

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Principles Of Taxation For Business And Investment Planning 2020 Edition

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