You Decide Week 3

You Decide Week 3
MEMORANDUM
TO: JOHN SMITH, JD
FROM: , CPA
DATE: MARCH 25, 2012
SUBJECT: Recommendations of tax affairs for prospective clients John and Jane Smith
Thank you for stopping by my office on Monday to discuss the relevant inquiries you and your wife Jane have while planning your 2011 tax return. I
am only responding to the issues we discussed. I am confident that I can provide the best guidance to minimize your tax liability for I have been in
practice for 5 yrs. As you know, there will be a billing for this consultation, but no tax return will be prepared unless an agreement is met. The issues to
be discussed are as follows:
1. John Smith tax issues:
a. How is the $300,000 treated for purposes of Federal tax ... Show more content on Helpwriting.net ...
Should you buy a new house or pay off the old mortgage. When it comes to tax laws mortgage interest expense is applied as a deduction only for
itemized and even that amount is only used if it exceeds the standard deduction. Section 163 (d), provides the limitations on investment interest, and
Section 163 (h), disallows deductions for personal interest unless exempt. For 2011, the standard deduction amount for MFJ is 11,800. There is a tax
savings of $50,000 that can be used towards a new home when a taxpayer sells principal residence. IRC Section 56 defines a qualified housing interest
В§ 56(e)(1) as interest on any indebtedness resulting from the refinancing of indebtedness meeting the requirements of qualified housing interest, but
only to the extent that the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness
immediately before the refinancing. In short, if you refinance your home, you cannot typically claim the entire amount of the refinance as a deduction
even if you take on more debt.
2b) Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John's case?
Buying a new home becomes a great investment since the IRS has an exchange code that taxes only the gain of a sale of a personal home. IRC
Section 1001 states that in general, whenever an asset is sold or
... Get more on HelpWriting.net ...

Phil
Bookkeeper 's Hiring Test
Basic Test Payroll Option Depreciation Option Inventory–Perpetual Option
Test Name: AIPB Hiring Test Test Form: 5 Test Points: 25.00
_________________________________________________
Name: ________________________________ Date: _________________ [1]BASIC BANK01 – BAT 003 Which of the following statements is true?
A. An asset account is increased by a credit B. An expense account is increase by a credit C. A revenue account is decreased by a credit D. An equity
account is decreased by a debit [2]BASIC BANK02 – BAT 010 The Income Summary account contains: A. Total revenues and total expenses for the
year B. Total assets and total liabilities at year end C. Total revenues, expenses, assets, and liabilities... Show more content on Helpwriting.net ...
If, at year end, 2 months have elapsed, what adjusting entry do you record? 2,000 A. Prepaid Legal Expense Legal Expense 2,000 2,000 B. Legal
Expense Prepaid Legal Expense 2,000 Legal Expense 3,000 C. Prepaid Legal Expense 3,000 12,000 D. Prepaid Legal Expense Cash 12,000
[10]BASIC BANK10 – COAE 010 On September 1, your firm incurs a routine $82 expense, mistakenly recording it as follows: Office Expense
Accounts Payable 28 28
On October 11 of the same year, your firm pays the $82 and records it as follows: Office Expense Cash 82 82
What correcting entry should you prepare? 54 A. Office Expense Accounts Payable 54 54 B. Accounts Payable Office Expense 54 28 C. Accounts
Payable Office Expense 28 D. No entry is needed
3 _________________________________________________
This test was designed by the American Institute of Professional Bookkeepers, the national association and certifying organization for bookkeepers. For
information, visit www.aipb.org or call 800–622–0121 © 2005 American Institute of Professional Bookkeepers All rights reserved.
Bookkeeper 's Hiring Test [11]PAYROLL BANK11– PHE 003 If employee Linda is paid $10 an hour and recorded the following hours for the
workweek, what are her gross wages for the workweek under federal law? Hours worked 8 4 8 6 4 4 5

Equipment Depreciation
Purchasing equipment is one of the biggest expenses that small businesses and start–ups face. The IRS allows you deduct most or all of these expenses.
This in turn helps you recoup the cost associated with running your business. Moreover, by taking this deduction when you prepare your tax return, it
lowers your overall tax bill. In some cases, especially for small businesses, the deductions could result in a refund.
There are different ways to expense business equipment when filing taxes, which can often lead to confusion. If you're unsure how the deductions will
affect your business, hiring a tax accountant is a good idea. Mistakes or miscalculations when filing your tax return could trigger an IRS audit. A
professional can lessen the stress and time constraints during the tax preparation season.
Types of Equipment Your Can Expense
Business equipment is ... Show more content on Helpwriting.net ...
For instance, furniture, office equipment, vehicles, computers, business software, and machinery would all fall under equipment depreciation. These
tangible items for your business are considered capital assets since they are used to make a profit.
Understanding Section 179 Deduction
Under Section 179, the IRS allows you to deduct the full price of the equipment you purchased or leased during the year. By taking this deduction, you
are essentially deducting the full cost of the equipment from your company's gross income.
Your company must have a taxable income before you can use the 179 deduction. Additionally, there is a cap on the deduction set at $500,000 that you
can claim. There is also a maximum of $2,010,000 for business equipment expenses during the year that Section 179 is claimed. Most small business
will not spend this amount on equipment during the early years of being in business, which is why this deduction is so valuable.
Section 179

The Benefits Of Cost Segregation
Advantages of Cost Segregation
Cost segregation is the process of grouping or classifying assets into different categories for the purpose of calculating depreciation values, in a
way that can be beneficial for the business, to an extent that can be allowed. It is a legitimate tax saving strategy that is often overlooked due to the
complexity and lack of proper guidelines in the past. However, in 1997, the court ruling in the case of Hospital Corporation of America (109 TC 21)
has set a precedent for many tax payers to pursue cost segregation. The key benefits of cost segregation are increased cash inflow, bonus depreciation,
write–off provisions, and property tax savings.
Background
Assets such as land, factory, and machinery used in production are some of the most significant investments for businesses. Businesses must capitalize
these long term assets and can allocate the costs over the useful life of the assets as they are subject to obsolescence, wear and tear. Before 1981, both
tax and financial accounting calculations for depreciation were similar; tax payers choose one of the various methods available. In 1981, tax and
financial accounting depreciation methods parted ways when Congress introduced the Accelerated Cost Recovery System (ACRS) for computing
depreciation expense. 1
This later paved way for the MACRS – Modified Accelerated Cost Recovery System, which is widely used even today. The method, recovery, period
and convention of MACRS vary based on whether

Federal Income 10th Ed Outline Essay
Income Tax Outline GROSS INCOME – В§ 61 – income from whatever source derived. A.В§ 1.61–1(a) – GI means all income from whatever source
derived, unless excluded by law. GI includes income realized in any form, whether in money, property or services. B.Cesarini v. U.S.– Found $ in
piano. Filed return claiming $. Filed claim for refund. See outline 1.Filed action in District Court since tax already paid, claiming refund. Taxpayer
argued (p. 43): a)Not gross income within В§61. b)Statute of limitations question. Piano purchased in 1957, not applicable to 1964 return; SOL
tolled. (1)SOL for return is 3 years from date of filing. (2)Taxpayer may waive SOL though to avoid immediate assessment. (3)SOL is 6 years, if
...
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B.Dean v. Commissioner – 80% owned by wife, 20% owned by husband, house transferred in as an asset of the corporation; corp. owns the house.
Living in the house is GI since corp. flipping the bill for them staying in the house. C.Problems (62) 1.Veggy growing vegetables. a)Harvest does
not constitute GI. b)Consume does not constitute GI. c)Sales of vegetables = GI. d)Exchange for tuna = GI. e)Exchange for providing service =
GI. She must pay tax on her proceeds along with the fair market value ($50) of the renting of the space. 2.Doctor/Lawyer swap services. a)Exchange
of services, must pay GI on fair market value of services. b)Can't charge yourself for your own services. EXCLUSION OF GIFTS AND
INHERITANCES A.Rules of Inclusion and Exclusion– Code В§102(a) and 1st sentence of 102(b). Reg В§1.102–1(a) and (b). 1.Gross Income
includes the receipt of any financial benefit which is: a)Not a mere return of capital, and b)Not accompanied by a contemporaneously acknowledged
obligation to repay, and c)Not excluded by a specific statutory provision. 2.Inclusions – a)IRC В§ 61 – GI b)IRC В§ 71 – Alimony, etc. 3.Exclusions–
a)IRC В§ 102 – Gifts and inheritances. (1)IRC В§102(a) – GI does not include the value of the property acquired by gift, bequest, devise, or
inheritance. (2)IRC В§102(b) – Revenue from the value of the gift can't

Calvin's Computer Case
Facts:
Calvin has bought a notebook computer and peripheral equipment including printer/scanner, software, external hard drive, and additional flat panel
monitor (from here on out referred to as "computer") costing $5,000 during the tax year. His employer, Diversified Investments did not reimburse him
for the purchase of this notebook computer. The computer is used twenty–five percent for business use and seventy–five percent for personal use. The
business use of this computer is related to Calvin's business of being an employee of Diversified Investments. The computer is exclusively used at
Calvin's home. In addition, purchase of the notebook computer is not a condition of employment for Calvin to be employed at Diversified Investments.
Issues: ... Show more content on Helpwriting.net ...
Ase mentioned earlier, Section 280F(d)(4) clearly identifies Calvin's computer as listed property. Section 280F(d)(3)(A) addresses the employee
use of listed property. "In general. Any employee use of listed property shall not be treated as use in a trade or business for purposes of
determining the amount of any depreciation deduction allowable to the employee (or the amount of any deduction allowable to the employee for
rentals or other payments under a lease of listed property) unless such use is for the convenience of the employer and required as a condition of
employment." Since Calvin's employer, Diversified Investments, did not require him to buy the computer, the computer was not required as a
condition of employment. Since the computer is listed property that is not for the convenience of the employer and required as a condition of
employment, employee use of the computer is not considered as use in trade or business. Since the computer is not considered to be in business
use, it is considered to be a personal use asset. Section 262 addresses personal expenses such as Calvin's laptop. It says "Except as otherwise
expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses." Nowhere in the chapter does it expressly
provide that a notebook computer and peripheral equipment may be

Acc307
S O LU T I O N TO C O R P O R AT I O N P R AC T I C E S E T
No More Ice, Inc.
1
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4
5
6
7
No More Ice, Inc. E. I. No. 98–7654321 A Schedule Attached to and Made Part of 2012 Form 1120–U.S. Corporation Income Tax Return List of
Attached Schedules
Schedule O–Consent Plan and Apportionment Schedule Form 1125–A–Cost of Goods Sold Forms 8949–Sales and Other Dispositions of Capital
Assets Form 4626–Alternative Minimum Tax–Corporations Schedule D–Capital Gains and Losses Schedule G (Form 1120)–Information on Certain
Persons Owning the Corporation's Voting Stock Form 1125
–E–Compensation of Officers Attachment–Supporting Details
9
11
12

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17
18
19
20
21 ... Show more content on Helpwriting.net ...
Procedural note. Wording in the Code and Regs. for this limitation follows the procedure below, starting with Taxable Income (TI) [Form 1120, p. 1, ln.
30]. When preparing the return, TI is not known (that is what we are trying to compute). Hence, it is not practical to start with TI; an alternate approach
is necessary. First, all items of income and deduction (other than charitable contribution deduction and dividends received deduction) should be
determined. Next, the "taxable income base" is computed by adding/subtracting all numbers for calculation of TI on Form 1120, p. 1 except deductions
for contributions, dividends received, net operating loss carryback, and capital loss carryback. Note that the "taxable income base" is calculated
WITHOUT CONTRIBUTIONS DEDUCTION AND DIVIDENDS RECEIVED DEDUCTION. Due to this, an interdependent effect (which would
require use of simultaneous equations to solve) is avoided. Proof: Taxable income .................................................................................... Adjustments to
eliminate deductions for: Contributions ......................................................... $9,570 Dividends received ................................................ 66,052 Net
operating loss carryback ................................. –0– Capital loss carryback

You Decide Week 4
Your Decide Assignment Week 4
ACC 553
a. How is the $300,000 treated for purposes of federal tax income?
In order to determining how the $300,000 fee was received as Federal income on the part Mrs. John Smith, we first have to determine the requirements
for income. According to Code Sec. 61(a)(1) of the Internal Revenue Code (IRC) "gross income includes all income from whatever source derived," that
is including the following items: compensation for services, including fees, commission, fringe benefits and similar items (Intuit–TaxAlmanac, 2006).
In John's case, income received from fees that were paid by his client from rendered services will meet that requirement of gross income. Under Section
... Show more content on Helpwriting.net ...
John currently leases the property for $3,500 per month for total of $42,000 annual payments. Payment under a lease is deductible (Smith,
Harmelink, & Hasselback, 2013). Rent is any amount you pay for the use of the property you do not own (IRS.Gov, 2011). John can deduct
rent as a business expense only if the rent for the property is used solely for business. If John decides to purchase the building he will indeed benefit
from the purchase versus leasing the property. John will benefit from Code Sec. 179, which allows him as a taxpayer to immediately expense a
portion of the cost of newly acquired depreciable property rather than depreciation it over multiple years (Smith, Harmelink, & Hasselback,
2013). A taxpayer may elect to treat the cost of section 179 properties as an expense, which is chargeable to capital account (Cornell University Law
School, 2013). They are limitations as to dollar amount that need to be taken into account under Section 179. If taxpayer places more than
$2,000,000 worth of section 179 properties into service during a single taxable year, than under section 179 deductions is reduced, dollar for dollar,
by the amount exceeding $2,000,000 threshold (Cornell University Law School, 2013). This threshold is reduced to $560,000 for years beginning in
2012, and $200,000 thereafter (Cornell University Law School, 2013). In addition for the purpose of

Essay Rock the Ages
Form 1065 Print or type. U.S. Return of Partnership Income For calendar year 2011, or tax year beginning , ending . OMB No. 1545–0099
Department of the Treasury Internal Revenue Service See separate instructions. Name of partnership D Employer identification number A Principal
business activity Music Agency B Principal product or service ROCK the Ages, LLC Number, street, and room or suite no. If a P.O. box, see the
instructions. 55–5555555 E Date business started Agent/Mgmt Services C Business code number 6102 Wilshire Boulevard, Suite 2100 City or town
State ZIP code 1/1/2000 F Total assets (see the instructions) 711410 G Check applicable boxes: Los Angeles (1) X Initial return (6)
... Show more
content on Helpwriting.net ...
. . . . . . . . 17 . . . . . . . . . . . . . 18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . 19 Employee benefit programs .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 . . . . . . . . . . . . . 20 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 760,000 . . .
. . 20 . . . 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . . . . . . 21 . . . . 3,648,000 . . . . . . . . . 22
Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . . . . . . . . .22 . . . .1,152,000. . . . . . . . . Under penalties of perjury, I
declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than general partner or limited liability company member manager) is based on all information
of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below (see instructions)? Yes No Sign Here Deductions
(see the instructions for limitations) Income X Signature of general partner or limited liability company member manager Print/Type preparer's name
Preparer's signature Date Date Check if self–employed Firm's EIN Phone no. State ZIP code Form 1065 (2011) PTIN Paid Preparer Use Only (HTA)
SELF–PREPARED RETURN

Eco/561 Business Proposal Essay examples
busin
Business Proposal
Ira Johnson, Jr.
ECO/561 Economics
November 19, 2012
Dr. Caryn Callahan
Business Proposal
In an effort to better serve the CVS Pharmacy consumer base, the need to offer a wider variety of prescription medication selections and options
system–wide. In this proposal, assumptions about the elasticity of demand and the market structure for these medications and expanded services will
be included. Additionally, how the expansion will increase revenues will be explained. Further, a rationale for determining the profit–maximizing
quantity will be provided.
Decisions will be made by using the concepts of marginal costs and marginal revenue to maximize profit. A mix ofpricing and non–pricing strategies
will be ... Show more content on Helpwriting.net ...
Assuming CVS uses an inventory tracking system to reduce shrinkage along with the implementation of automated dispensing and verification
systems, the total profit for dispensing 80 prescriptions now rises to $600, a marginal profit of $100. To find a new profit–maximizing quantity, the
assumption is the marginal profit for selling 100 prescriptions is $675–the profit–maximizing quantity still has not been reached. The sale of 120
prescriptions produces a total profit of $650 and a marginal loss of $25. Thus, the new profit–maximizing quantity is 100 prescriptions.
Marginal Cost & Revenue
An alternative method for determining the profit–maximizing quantity is to determine where marginal costs equal marginal revenue. Instead of
calculating profits for each level of sales, total variable costs and total revenue are calculated. Marginal costs and marginal revenues are calculated in
the same manner as marginal profit, thereby determining the amount of change for each level of sales (Huter, 2012, p.2).
Pricing & Non–Pricing Strategies
Because CVS must consider several factors affecting its business, such as: suppliers, consumer demands, competitors and their existing products,
pricing strategies are complex. Options for pricing strategies may include: membership or trade pricing, geographical pricing, penetration pricing,
product bundle pricing, discounts, and closeouts. Options for non–pricing strategies include:

Essay about You Decide Acct 553
You Decide: ACCT553
Federal Taxes & Management Decisions
MEMORANDUM
TO: Mr. John Smith & Mrs. Jane Smith
FROM: Allan Steynor
DATE: February 3rd, 2013
RE: Tax Advice for 2013
Dear Mr & Mrs Smith,
I want to take the opportunity for choosing my CPA office to help with your annualtax needs. We hope that we can provide you with a high quality
and professional service and that you are happy with the advice you receive. I have written a brief memo on the initial discussion that we had
addressing the issues that you both raised individually and together. If you have any further enquiries please do not hesitate to contact myself or one of
my colleagues.
1. John Smith Tax Issues
a. $300,000 received in fees
The ... Show more content on Helpwriting.net ...
With regards to expenses, ensure that your perform a in depth review of expenses incurred over the two years and if they are both necessary and
ordinary then they can be deducted for your annual income.
2. Jane Smith Tax Issues

a. Paying down old mortgage vs. assuming new mortgage
Paying down the old mortgage provides no tax benefits and results ties up your available cash. If you are looking to purchase a new home, I would
suggest that you sell the old house and use the money to assume a new mortgage. By selling the old house you may exclude $250,000 of the gain if
you file individually or $500,000 if you file as a couple and therefore not have to pay tax on the gain from the sale. With the new mortgage you will
also be able to file the property tax and interest payments as deductions on your tax returns.
b. 1031 tax exchange
Unfortunately you would not be able to make use of a 1031 tax exchange as it is required that the properties must be primarily used for the operation
of a trade or business. Since the more expensive home would become your primary residence it would not qualify.
c. Is the jewellery making a business or hobby?
I would imagine that since this activity is done with the intention, and expectation, to gain a profit it would qualify as a business. The main indicator is
that you would like to purchase new equipment with the intent to make more money. The IRS would use the "3 of 5"

Essay Ac553 You Decide Week 4
Memo To: John and Jane Smith From: Your Name, CPA Date: February 2, 2013 Subject: Explanation of business and personal tax benefits and
liabilities. 1(a). As a result of a recent court settlement for a client John earned $300,000 for his law practice LLC. He wants to minimize his tax
liability and understand how the IRS will treat this money earned. He lease's office space for $3,500 per month. He wants to know the advantages in
leasing office space versus purchasing the building. John has income derived from a business and as such the gross income will be taxable (Code
В§1.61–3(a)) (Tax Almanac, 2005). This $300,000 taxable income will pass through to his personal taxes and is subject to self employment tax since
he has an LLC. He... Show more content on Helpwriting.net ...
Since John and Jane do not have employer sponsored retirement programs, I recommend establishing traditional IRA's. This will allow both of
them to have a retirement program and a tax deduction each year of $10,000 (В§219(f) (3)) (Tax Almanac, 2007, April 27). John is able to
establish Jane's IRA and contribute since she has minimal income (Code В§219(c )) (Tax Almanac, 2007, April 27). With the lease payment of
$42,000 and the IRA's of $10,000, John will have deductions of $52,000 against the $300,000 and an additional deduction of paying half of the
self employment tax. 2(a) Jane inquired what the tax treatment difference if any there is in paying down a mortgage and assuming a new mortgage
in terms of federal taxes. Married taxpayers may exclude up to $500,000 of gain upon the sale of their residence every two years (Code В§
121(b)(1) and (2), (Code В§121(b)(3)(B)) (Tax Almanac. 2009, June 18, Internal Revenue Code:Sec. 121. Exclusion of Gain from Sale of Principal
Residence). The requirement is that they need to have owned and occupied the residence as their principal residence for two out of the last five
years prior to the sale (Code В§121(b)(3)(A)) (Tax Almanac, 2009, June 18). Assuming a new mortgage will most likely give them a larger deduction
of mortgage interest and if they have lived in their current home for a while that is nondeductible (Code В§ 163(h)(3)(E)(i) (Tax Almanac. 2009, June
18, . Internal Revenue Code:Sec. 163.

Gleim Questions
In Year 1, Brun Corp. properly accrued $10,000 for an income item on the basis of a reasonable estimate. In Year 2, Brun determined that the exact
amount was $12,000. Which of the following statements is true?| | A.| Brun is required to file an amended return to report the additional $2,000 of
income.| B.| Brun is required to notify the IRS within 30 days of the determination of the exact amount of the item.| C.| The $2,000 difference is
includible in Brun's Year 2income tax return.| | ABC Corporation ends its tax year on October 30. When must ABC's income tax return be filed for the
year ending October 30, Year 1?| | A.| January 15, Year 2.| | An S corporation engaged in manufacturing has a year end of June... Show more content on
Helpwriting.net ...
| | A.| Any new domestic eligible entity having at least two or more members is classified as a partnership.| B.| Any new domestic eligible entity
with a single member is disregarded as an entity separate from its owner.| C.| If all members of a new foreign entity have limited liability, the
entity is classified as an association taxed as a corporation.| D.| All of the answers are correct.| | All of the following businesses, formed after 1996,
are automatically classified as corporations except| | A.| An insurance company.| B.| A partnership that possesses at least three of the following
characteristics: limited liability, centralized management, free transferability of interest, and continuity of life.| | In 2012, CPAs, Inc., a
corporation owned entirely by its employees, all of whom are certified public accountants performing only services in the accounting profession,
had taxable income of $110,000. The corporation has never exceeded $5 million in gross receipts. The following is an excerpt from the 2012
corporation income tax rates schedule: Income| But Not| | % on| Of Amount| at Least| over| Pay +| Excess| over| | | | | | | | | | | 0| 50,000| 0| 15%| 0|
50,000| 75,000| 7,500| 25%| 50,000| 75,000| 100,000| 13,750| 34%| 75,000| 100,000| 335,000| 22,250| 39%| 100,000|
What is the tax liability of CPAs, Inc., for 2013? |

New Business
ARKANSAS
STARTING A NEW BUSINESS
An Educational Brochure for Arkansas Taxpayers
Department of Finance and Administration P. O. Box 1272 Little Rock, AR 72203
TABLE OF CONTENTS
Page
SALES & USE TAX .......................................................................................................... 1INCOME TAX
WITHHOLDING....................................................................................... 3 MISCELLANEOUS TAX
................................................................................................... 5 INDIVIDUAL ESTIMATED TAX
..................................................................................... 6 PARTNERSHIPS AND LLC's... Show more content on Helpwriting.net ...
2. Cigarettes. If the business sells cigarettes, additional documents must also be filed with the Tobacco Control Board. Phone numbers and web page
addresses are provided at the end of this publication. 3. Additional tax is collected on a rental vehicle. The following example lists sales and rental tax
that is collected for a rental vehicle in Little Rock, Arkansas.
6.00% 10.00% 1.00% 1.00% .50% State Sales (Gross Receipts) Tax State Rental Vehicle Tax Pulaski County Sales (Gross Receipts) Tax Pulaski
County Rental Vehicle Tax Little Rock Sales (Gross Receipts) Tax–1–
.50% 19.00%
Little Rock Rental Vehicle Tax Total tax on Rental Vehicle
4. Sales tax also applies to the service of furnishing rooms by hotels, apartment hotels, lodging houses, tourist camps, or courts to transient guests who
rent on less than a month–to–month basis. An additional two percent tourism tax applies to these lodging services as well as to the admission price to
tourist attractions, watercraft rental, boat motors and related marine equipment, life jackets and cushions, water skis, and oars or paddles. A business
making sales of tangible personal property from outside Arkansas by means of sales persons, solicitors, distributors, agents, or by taking orders for
sales of the same must register under the Compensating Use Tax Law. If a business purchases items from outside of Arkansas for use, storage,

distribution, or consumption within

The New Tax Law Through President Obama 's Term, Congress
With possibly the last changes to the tax law through President Obama's term, Congress agrees on making many of the "Tax Extenders" permanent.
These so–called "Tax Extenders" are tax provisions that Congress has passed over the past few years with short–term expiration dates, at which point
the provision would lapse. Typically, after the provision lapsed, Congress would retroactively reinstate the provisions, thus extending its life through
the current tax year. This has led to some tax planners relying on the hopes that Congress will reinstate these provisions, without the explicit
knowledge that they would do so. Therefore, the now permanent provisions (those that have been extended without a set expiration date) are able to
give tax planning professionals more certainty in their projections. The act made several changes to Section 529 Plans alongside with these
"extenders". The chart below briefly summarizes the new tax law changes from the PATH Act of 2015 that most closely affect individuals and small
businesses. It should be noted that this does not encompass all aspects of the act, as there are several changes that apply to larger corporations, IRS
reform, and the prevention of fraud and abuse. *Adapted from "Congress Approves (Mostly Permanent) 2015 Tax Extenders Legislation For QCDs
And More!" by Michael Kitces PermanentProvisions Qualified Charitable Distributions (QCD) – In 2006, Congress allowed qualified distributions
from IRAs to be directly given to

Tax Return
Form Department of the Treasury Internal Revenue Service 1065 U.S. Return of Partnership Income For calendar year 2009, or tax year beginning
Name of partnership , 2009, ending , 20 . OMB No. 1545–0099 See separate instructions. 2009 89:3456798 1999 A Principal business activity Use the
Dapper–Dons Partnership IRS Number, street, and room or suite no. If a P.O. box, see the instructions. B Principal product or service label. Men 's
Clothes Other– 123 Flamingo Drive wise, City or town, state, and ZIP code C Business code number print or type. Miami, FL 33131 448110 Tailor D
Employer identification number E Date business started F Total assets (see the instructions) $ 1,128,000 Amended return G H I... Show more content on
Helpwriting.net ...
Cat. No. 11390Z Form Preparer's SSN or PTIN For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. 1065 (2009) Form 1065
(2009) Page 2 Schedule A 1 2 3 4 5 6 7 8 9a Cost of Goods Sold (see the instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 1 2 3 4 5 6 7 8 200,050 624,000 600,000 7,000 47,000 1,478,050 146,000 1,332,050 Inventory at beginning of year . . . . . . . . . . . . . . . .
Purchases less cost of items withdrawn for personal use . . . . . . . Cost of labor . . . . . . . . . . . . . . . . . . . . . Additional section 263A costs (attach
statement) . . . . . . . . . . Other costs (attach statement) . . . . . . . . . . . . . . . Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . Inventory at end of year
. . . . . . . . . . . . . . . . . Cost of goods sold. Subtract line 7 from line 6. Enter here and on page 1, line 2 Check all methods used for valuing closing
inventory: (i) Cost as described in Regulations section 1.471–3 (ii) Lower of cost or market as described in Regulations section 1.471–4 Other (specify
method used and attach explanation) (iii) b c d e Check this box if there was a writedown of "subnormal" goods as described in Regulations section
1.471–2(c) . . Check this box if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . Do the

Accounts Receivable : Costs Capitalized And The Buyer Essay
– Accounts receivable: costs capitalized and the buyer has gain or loss if the amount collected varies from the amount capitalized.
– Inventory: costs capitalized and deducted against sales as cost of goods sold.
– Equipment: costs capitalized and depreciated. Sales tax may apply to the amount allocated to the equipment.
– Franchises and the right to use trade names and trademarks: generally, payments are currently deductible if the amount of the payments is contingent
on the use, productivity or disposition of the franchise, trademark or trade name. If the amount of the payments is not contingent, the deductions are
spread over 15 years. If the buyer acquires all of the seller's significant rights in the franchise, trademark or trade name, the buyer cannot deduct the
amount paid for these items unless the buyer can show that they have a limited useful life.
– Land: costs capitalized and not deducted or depreciated.
В¬– Real estate improvements: costs capitalized and depreciated.
– Favorable lease: costs allocated to the lease are amortized over the remaining lease term. (not subject to the 15–year amortization rule for other
intangibles)
– Consulting agreements, employment agreements: payments generally deductible over the term of the agreement.
– Covenants not to compete: capitalize and deduct over 15 years (capitalize each payment and amortize it over the balance of the 15–year period, as
opposed to taking 1/15th of the aggregate covenant payments in the first

Federal Taxation -You Decide Paper
Memo To: John and Jane Smith From: Desiree Looft, CPA Date: September 24, 2011 Subject: Explanation of tax benefits and liabilities for
business and personal. 1(a) As a result of a recent court settlement for a client John earned $300,000 for his law practice LLC. He wants to minimize
his tax liability and understand how the IRS will treat this money earned. He lease's office space for $3,500 per month. He wants to know the
advantages in leasing office space versus purchasing the building. John has income derived from a business and as such the gross income will be
taxable. (Code В§1.61–3(a)) This total amount of taxable income will pass through to his personal taxes since he has an LLC, meaning he will be
subject to self... Show more content on Helpwriting.net ...
(Code В§219(c )) With the lease payment and the IRA's John will have deductions of $52,000 against the $300,000 and an additional deduction of
paying half of the self employment tax. () 2(a) Jane inquired concerning what the tax treatment difference if any there is in paying down a
mortgage and assuming a new mortgage in terms of federal taxes. Married taxpayers may exclude up to $500,000 of gain upon the sale of their
residence every two years. (Code В§ 121(b)(1) and (2), (Code В§121(b)(3)(B)). The requirement is they need to have owned and occupied the
residence as their principal residence for two out of the last five years prior to the sale. (Code В§121(b)(3)(A)) Assuming a new mortgage will
most likely give them a larger deduction of mortgage interest if they have lived in their current home for a while that is otherwise nondeductible.
(Code В§ 163(h)(3)(E)(i). In summary the only tax advantage is the ability to have a larger deduction of mortgage interest on the new home.
(Code В§ 163(h)(3)(E)(i). With the sale of their current home they would be able to exclude the gain from the sale up to $500,000. (Code
В§121(b)(1) and (2)) A word of caution if the sale of their new home the gain is more than $500,000 they would have to pay tax on the amount over
at a rate of 25%. 2(b) Jane has inquired about the 1031 tax exchange if they could use that plus some of John's money from the case to purchase a
more expensive house. The words "like–kind" are

Acc 553 You Decide
Memo To:John & Jane Smith From:Date:Re:Memo summarizing various tax issues 1. John Smith 's tax issues: Issue a) How is the
$300,000 treated for purposes of federal tax income? John Smith's earned income of $300,000 will reported as gross income either on Schedule c
of the individual return or as gross income on the LLC return. As a result of the variance in the state laws as to whether or not a single person LLC
can report on a business return is the reasons why it could be either reported on the Schedule C or LLC. Some states that do not allow the separate
reporting see the LLC as meaning not to be reported separately from the individual. Issue b) How is the $25,000 treated for purposes of federal tax
income?... Show more content on Helpwriting.net ...
She can use Schedule C that is part of the Form 1040 in joint filing. Separate can also mean LLC which does report separately. Tax on the income
will be part of their joint return, whether using a Schedule C or LLC. Issue e) What tax benefits would John realize if he invested $15,000 in Jane 's
jewelry making? Looking at John's income, there would be no tax benefits. Jane, however there is. Using the $15,000 for purchasing equipment could
produce tax benefits that would become part of their joint return. John would benefit indirectly from his investment in Jane's business, but Jane would
have to use the fund for deductible purposes. If the funds were to just stay in the bank account, no benefit would come from that. Issue f) Can Jane
depreciates her vehicle or jewelry–making equipment? How? Jane can depreciate her vehicle by declaring the depreciation and auto expense to the
extent of the business use based on the mileage. Jane could keep a record of her miles use for her business and use the standard mileage rate. The
equipment can be depreciated under Section179. This allows for a full write off in a year of acquisition. Another way the equipment can be
depreciated is using the MACRS depreciation. This allows a systematic write off of equipment based on the type of assets. 3. John and Jane Smith tax
issue: Issue a) Should John and Jane file separate or joint tax returns? No, John and Jane

Essay about quiz 8
Accounting 430 – Quiz 8
1) Assuming a 25 percent tax rate, compute the after–tax cost of $23,000 worth of advertising costs. (part c)
a) $23,000
b) $20,125
c) $17,250
Because the advertising cost is deductible, its after–tax cost is $17,250 ($23,000 – [$23,000 Г— 25%]).
d) $27,500
2) In 2013, Firm A paid $50,000 cash to purchase a tangible businessasset. In 2013 and 2014, it deducted $3,140 and $7,200 depreciation with respect
to the asset. Firm A's marginal tax rate in both years was 35 percent. Compute Firm A's adjusted basis in the asset at the end of each year. (part b)
a) 2013: $39,660; 2014: $29,320
b) 2013: $46,860; 2014: $39,660
Initial cost basis$50,000
Year 1 depreciation (3,140)
Adjusted basis at end of ... Show more content on Helpwriting.net ...
BookTax
Direct material cost$200,000$200,000
Direct labor cost130,000130,000
Indirect costs 85,000116,000
Total cost of 1,000 units$415,000$446,000
Cost of ending inventory (260 units)(107,900)(115,960)
Cost of goods sold (740 units)$307,100$330,040
[$415,000/1,000 = $415 each unit of inventory (book)]
[$446,000/1,000 = $446 each unit of inventory (tax)]
c) Book: $107,900; Tax: $115,960
d) Book: $350,400; Tax: $298,700
5) Herelt Inc., a calendar year taxpayer, purchased equipment for $383,600 and placed it in service on April 1, 2014. The equipment was seven–year
recovery property, and Herelt used the half–year convention to compute MACRS depreciation. Compute Herelt's MACRS depreciation for 2016 if it

disposes of the equipment on February 9, 2016. (part c)
a) $25,483
b) $67,092
c) $42,421
d) $33,546
Herelt's MACRS depreciation for the year of disposition is based on the half–year convention. Thus, 2016 depreciation is $33,546 (50% [$383,600 Г—
17.49%]).
6) The Section 179 expense election applies to what type of assets?
a) Only startup expenses.
b) Intangible assets.
c) Depreciable personalty.
d) Only residential real property.
7) Start–up costs may be only partially deductible in the year incurred, but expansion costs are fully deductible in the year incurred.
a) True
b) False
8) Bonus depreciations allows the purchaser of qualified

Business Plan For A Business Essay
Starting a business can be very expensive and one way to defer some of those costs would be to take on a partner. A partnership exists when at least
two owners go into business, but have not filed papers to the state to become a company. (Laurence) Our business should consider a general
partnership where profits and liabilities are divided and shared equally. For example, the cost of ownership or leasing would reduce 50% for each
partner. In addition to having a partner we should consider the Part 135 Certificate. This certificate places our airplane on a professional charter,
which will enable our business to hire out our services during down time. (Shoreline Aviation Worldwide Charter & FBO Services, 2013) An operator
working for the charter "markets and sells time on our aircraft and has the expertise and clientele to readily fill available time–frames, while managing
all related Part 135 requirements." (Shoreline Aviation Worldwide Charter & FBO Services, 2013) This not only frees up our personnel, but also the
added bonus enlists a service that has already built up their clientele. This could stand to be a huge savings to our business by helping to defer costs of
operations, taxes and maintenance. The aircraft and hanger purchases are one–time purchases and the other support element costs are annual costs.
Potential annual savings to have a partner total $717,500. Support ElementCostPartner Gulfstream G550$53,500,000$26,750,000
Hanger$30,000$15,000 Operating

Essay on You Decide (Acct 553 Wk 4)
You Decide
You Decide Activity (125 points)
Scenario Summary
You are a CPA with an office in NearLakes City and clients consisting primarily of professionals, entrepreneurs, and small business owners. John
Smith, Esq., a practicing attorney with offices near yours, walks in your office and wants advice from you relating to a recent influx of cash he
received as a result of winning a large jury verdict on behalf of his client in a personal injury case. His wife Jane Smith accompanies him during your
meeting because she has some additional tax planning advice to ask of you.
Role
After reviewing John and Jane Smith's points of view, it will be your turn as a tax professional to decide on the best course of action from a tax ... Show
more content on Helpwriting.net ...
Also, I sell handcrafted jewelry which earned me $20,000 last year. Do my business activities constitute a trade or business for federal income tax
purposes? Or, is this just a hobby? Should I establish a separate trade or business to get tax benefits on these earnings? Does it make any difference
that I use my car primarily for transporting my jewelry to different shops around town? Finally, I think I can earn more money if John were willing to
invest $15,000 for new jewelry making equipment since my original equipment, which cost $10,000 five years ago, is almost obsolete. Does this make
sense from a tax perspective?
Memo
To:John & Jane Smith
From:Matt Walker, CPA
Date:August 5, 2012
Re:Memo summarizing various tax issues
1. John Smith's tax issues:
Issue (a)
How is the $300,000 treated for purposes of federal tax income?
Applicable Law & Analysis:

US code defines gross income in 26 U.S.C В§ 61 as "income means all income from whatever source derived, including (but not limited to)..."
For the states that don't allow separate reporting, the LLC is said to be transparent meaning it does not report separately from the individual. The
$300,000 is also will be considered part of lawyer's income as all income includes all monies derived from all sources and it will be taxable income.
Conclusion:
The $300,000 is earned income for John Smith and will be reported as

Federal Taxation Ch 6 Solution Manual
73
Chapter 6 Deductions: General Concepts and Trade or Business Deductions
SUMMARY OF CHAPTER
Tax deductions are allowed to taxpayers only if speciп¬Ѓcally authorized by the Internal Revenue Code. Deductions allowable to individual taxpayers
fall into four categories: trade or business expenses, expenses incurred for the production of income, losses, and personal expenses. In addition to
discussing the general requirements for deductibility for each of the above types of expenses, this chapter also discusses the tax treatment of many
commonly encountered expenses incurred by taxpayers, from trade or business expenses such as rent, insurance, interest, taxes, bad debts, etc. to
employee business expenses (travel, transportation, etc.) to ... Show more content on Helpwriting.net ...
Personal expenses deducted as itemized deductions are discussed in Chapter 8.
Trade or Business Deductions
В¶6201 Overview–Code Sec. 162 Under Code Sec. 162, all ordinary, necessary and reasonable expenses incurred in carrying on a trade or business
activity are deductible. This is true whether the taxpayer's business activities are structured as a sole proprietor, a partnership, or a corporation.
Allowable trade or business expenses incurred by individuals are deductible "for" AGI, usually on Schedule C, attached to Form 1040. В¶6205
General Criteria There are four requirements for an expense to be deductible as a trade or business expense: (1) It must be related to carrying on a
trade or business activity (as opposed, for example, to a hobby activity); (2) It must be ordinary and necessary; (3) It must be reasonable; and (4) It
must be paid or incurred during the taxable year. В¶6215 Expense Must Be Incurred in a Trade or Business Activity A deduction is authorized by
Code Sec. 162 only if the expenditure is paid or incurred in an activity that constitutes a trade or business. The purpose of this requirement is to deny
deductions for expenses incurred in activities that are primarily personal in nature. Business status requires both a proп¬Ѓt motive and a suп¬ѓcient
degree of taxpayer involvement in the activity to distinguish the activity from a passive

Sabanes Oxley Act of 2002
Depreciation and depletion are two models of computing financial reports. These techniques are used as adjustments when preparing statements of cash
flow within the direct or indirect method. This paper will identify and examine the methods of depreciation and depletion, describe the difference
between the methods, and compare and contrast depreciation and depletion as well using scholarly references to support the points.
Net income is reduced through depreciation and is an expense of the company. It does not reduce cash of the company. This adjustment does not
involve the calculations of current cash flow. Calculations should be put back on net income in order to produce the outcomes of cash that has been
provided by the operations of ... Show more content on Helpwriting.net ...
The sum of year method is also known as amortization and accelerated depreciation techniques. It is put to use when one applies intangible assets and
is an acceptable way to calculate cost allocation. (Noland, 2011) Many used to see this method as producing the best possible cost allocation outcomes.
The sum of the year model is mostly used by regulated industries and banks. (Noland, 2011) It is acceptable to use this method to report finances, but
is not acceptable to use for reporting taxes. This method was used by many until it was no longer acceptable to use for reporting taxes.
This occurred when the Accelerated Cost Recovery System was placed. Noland (2011) stated that this act, that was placed in 1981 "specified both
the life of the asset and the depreciation rate for tax purposes" (p. 2). This system has changed and has been renamed and is now known as MACRS.
The Modified Accelerated Cost Recovery System is another model of depreiciation. The MACRS is the only approved method to use in the US.
Using this method, the depreciation always equals 0. Properly is categorized and then placed in classes. These classes normally determine recovery
periods, leaving a year longer to recover. With this method, the rates are tabulated. By using the regular MACRS, the recovery periods will be longer.
Straight line can be used in combination with MACRS.
The MACRS does not consider

tax exam final 2
CHAPTER 4
David and Lilly Fernandez have determined their tax liability on their joint tax return to be $1,740. They have made prepayments of $1,100 and also
have a child tax credit of $1,000. What is the amount of their tax refund or taxes due?
(1)Total tax$1,740
(2)Child tax credit1,000
(3)Prepayments1,100
Tax refund $(360) Explanation:
David and Lilly will receive a tax refund of $360 calculated as follows: Tax refund = $1,740 в€’ $1,100 в€’ $1,000 = в€’$360
Prepayments are fully refundable when payments exceed the taxes after credits because the refundable amount is essentially an overpayment of taxes.
2.
Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their ... Show more content on
Helpwriting.net ...
b.
Married filing jointly with two personal exemptions and one dependency exemption for Steve. Steve meets the test to be Geneva and her husband's
qualifying child as follows: Test
Steve
Relationship
Yes, Steve is the taxpayers' son. Age
Yes, under age 24 and a full–time student (and younger than parents). Residence
Yes, temporary absences away at school count as time in the parents' home Support
Yes, even though the Steve earned $13,100, he did not use any of that money to provide for his support. Steve's parents provided more than half (all,
in fact) of his support for the year. A qualifying child is not subject to the gross income test.

c.
Head of household with two exemptions. Hamish is not a qualifying widower because he does not maintain a household for a dependent child.
However, he does qualify for head of household because he is not married and he pays more than half the cost of maintaining a separate household
that is the principal place of abode for his father, and his father also qualifies as his dependent (as a qualifying relative) as follows: Because Reggie
is considered to be Hamish's qualifying relative (and a qualifying person for purposes of the head of household filing status), Hamish may also claim a
dependency exemption for Reggie. Test
Reggie
Relationship
Yes, Reggie is Hamish's father. Age
Not applicable to qualifying relative Residence
Not applicable to qualifying

You Decide 1
Memo
To:John & Jane Smith
From:
Re:Memo summarizing various tax issues
1. John Smith 's tax issues:
Issue a) How is the $300,000 treated for purposes of federal tax income?
Applicable Law & Analysis: http://www.irs.gov/businesses/small/selfemployed/index.html
Conclusion: The $300,000 will be treated as self– employed income. Generally you are self–employed if you carry on a trade or business as a sole
proprietor, independent contractor, or if you are a member of a partnership. Self–employed individuals are required to file an annual return, and pay
estimated tax quarterly.
Issue b) How is the $25,000 treated for purposes of federal tax income?
Applicable Law & Analysis: www.irs.gov
Conclusion: The ... Show more content on Helpwriting.net ...
Conclusion: Jane has a business. If time and effort put into the activity is intended to make a profit, this is considered a business. Business versus
hobby is important because taxpayers who incorrectly report losses from hobby activities can be subject to additional taxes, interest and penalties in an
audit (http://www.irsvideos.gov/Professional/HobbyBusiness)
Issue d) Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry–making activities?
Applicable Law & Analysis: www.irs.gov

Conclusion: Jane and John would have better tax benefits if Jane had a separate business for her jewelry– making activities. Cost of goods sold is
deducted from your gross receipts to figure your gross profit for the year; this could include the cost of material. Jane can also deduct expenses for the
business use of her home. Jane can also deduct car expenses mileage rates from 1/1/11–6/30/11 is .51 per mile and from 7/1/11–12/31/11 .55 per mile
(www.irs.gov)
Issue e) What tax benefits would John realize if he invested $15,000 in Jane 's jewelry making?
Applicable Law & Analysis: http://perlmutter.house.gov/index.php?option=com_content&view=article&id=707&Itemid=88–
Business tax benefits under the recovery act.
Conclusion: Small Business Investment: Spurs investments in small businesses by cutting the capital gains tax on investors in small businesses who
buy stock (in the next two

Questions On Tax Savvy, Class 1, Cash, Demand Deposits,...
Buyer:
Class 1: As specified in Tax Savvy, is class includes: "Cash, demand deposits, bank accounts and other depository institutions. Since these accounts
only have minimal left in them at the time of sale, I assumed that this class would contain about one percent of the total sales value. In addition, since
this class has minimal tax implications for the buyer or the seller (do to the low value it holds and to the nature of the assets contained in this
category), I maintained the one percent ratio for the buyer situation as well.
Class 2: This class includes assets that can be easily convertible to cash, such as CD's, securities, stock, and foreign currency. For simplicity purposes, I
assumed that this account would not contain a ... Show more content on Helpwriting.net ...
As a result, I left the allocation for this class at zero percentage.
Class 4: This class primarily consists of the businesses inventory. As tax Savvy mentions, the buyer would attempt to discount the value of the
inventory due to the expectation that some of the existing inventory will be unusable or obsolete. Therefore, I made the assumption that the buyer
would look to allocate twenty percent of the sales price, or $100,000 to class 4. Based upon this number, I am also assuming that the book value of the
inventory is currently higher than $100,000, in order to reflect the discount which would be favorable to the buyer.
Class 5: This class is where the buyer will attempt to strategically place as much of the purchase price as possible. The buyer will attempt to do so,
due to the fact that the items included in this class (with the exception of land) have shorter depreciable lives than many of the other classes. In
addition, this classes item are typically eligible for additional deductions, such as 179 expensing and bonus depreciation (although the extent of these
two deductions may be changing for the 2015 tax year). Based upon this information, and knowing that the assets should not be assigned value in
excess of their fair market value, I allocated sixty–five percent of the business purchase price to this class. This percentage resulted in a value of
$325,000

You Decide
Dear Mr. & Mrs. Smith,
It was a pleasure meeting with you on last week. This memo contains a list of the concerns that you mentioned during our meeting and the
recommendation I have for each of your concerns. Please call me once you have reviewed the memo so we can go over any questions you may have
and work on getting things in order.
John's questions:
a. How is the $300,000 treated for purposes of Federal tax income?
The $300,000 is included in your gross income. You earned the $300,000 by providing legal services. For federal income tax purposes, "gross
income" means all income from whatever source derived and includes compensation for services I.R.C. В§ 61. Any income, from whatever
source, is presumed to be income ... Show more content on Helpwriting.net ...
c. Does Jane have a business or hobby? Why is this distinction important?
Jane has a business.
Jane has a business and not a hobby. To be considered a business, an activity must have a profit motive.
One of the main distinction is that deduct for hobby expenses can only be deducted up to the amount of your hobby income. Expenses that are more
than the income you made from your hobby are nondeductible personal losses.
For a business losses can offset other income. Since Jane has a business and not a hobby. I recommend that a SEP IRA be open for Jane also. An IRA
for Jane will provide additional tax saving benefits.
d. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry making activities?
Yes. Jane needs to file a separate business return. I recommend that the income Jane has earned from her jewelry making go on a schedule C. I would
recommend that she sets up an LLC for the business. This way she officially separates the business from herself.
e. What tax benefits would John realize if he invested $15,000 in Jane's jewelry making?

Yes there may be an indirect benefit to John if he makes a $15,000 investment into Jane's business if John and Jane file 'Married filing jointly tax
return. Jane must use the $15,000 for business deductible purchases. If the money sits in the bank it will not provide a tax benefit.
f. Can Jane depreciate her vehicle or jewelry making

Problem 9-61 Essay
ACCT 420–D1
TAX REASERCH PROBLEM
9–61
From Prentice Hall federal taxation
Caitlin and Wally formed the C&W Partnership on September 20, 2012. Caitlin contributed cash of $195,000, and Wally contributed office furniture
with a FMV of $66,000. He bought the furniture for $60,000 on January 5, 2012, and placed it in service on that date. Wally will not elect Sec. 179
expensing on the furniture and elected out of bonus depreciation. He also contributed and office building and land with a combined FMV of
$129,000. The land's FMV is $9,000. Wally bought the land in 2005 for $8,000 and had the building constructed for $100,000. The building was
placed in service in June 2008.
Required: Your tax... Show more content on Helpwriting.net ...
26 USC В§ 168 (c) the building has 39 year recovery period. The calculation of depreciation for each year is found by multiplying the MACRS value
for the relevant year by the cost of the nonresidential real property at the time of purchase. The basis at the time of contribution is found by summing
the depreciation values for each year with one exception, the MACRS value for 2012 must be adjusted for the percentage of the year that the property
was under the partnership. This is calculated by multiplying the MACRS value by the percentage of the year completed at the time of contribution. See
the calculations below:
Basis: Building Contribution
Date of Purchase2008
Date of Contribution2012
Time under owner in 20120.67
Purchase Cost$ 100,000.00
YearMACRS 39yr, Straight–Line14.29%
20080.01391$ 1,391.00
20090.02564$ 2,564.00
20100.02564$ 2,564.00
20110.02564$ 2,564.00
20120.02564$ 2,564.00

Total

The Best Small Business Tax Tips And Deductions
The Best Small Business Tax Tips and Deductions The Best Small Business Tax Tips and Deductions Small
–to–medium–sized businesses can target a
wealth of business opportunities in today 's global markets, but many business owners and entrepreneurs fail to consider one of the greatest sources of
real–world income available to them. Developing a proactive tax strategy and taking advantage of all your business deductions generate incredible
profits that businesses or owners can use for any purpose. Unlike the proceeds of gross sales and even gross profits, the money that your business
saves on taxes is the purest form of profit. Other income isn 't necessarily available for spending or investing until the taxes are paid. Clever business
owners... Show more content on Helpwriting.net ...
Taking Home Office Deduction The home office deduction is available to many SMB owners who work out of their homes exclusively or routinely
meet clients and work at home. You can deduct a percentage of your home that 's used exclusively for business and the same percentage of most of
your household expenses like repairs, utilities, routine maintenance, insurance, mortgage interest, property taxes, rent, office supplies and many other
costs. You can deduct actual expenses or take the recently approved standard deduction for home offices. Hiring Family Members Hiring family
members is one of the most effective ways for business owners to reduce taxes and keep more of their wealth in the family. Employees can qualify for
tax–free benefits, and your children can earn up to $6,200 tax–free. This money can be placed in a Roth IRA, which can be used to buy a home or pay
for college. Children also qualify for lower tax rates on the income that they earn. Most business owners have real jobs around the office that family
members can do; it 's just a matter of matching the right child with the right job. Contributions to HSAs, providing health insurance and other employee
benefits also keep your business income "in the family" without paying taxes. Reporting Actual vehicle Expenses The standard mileage rate has its
appeal, but you could be

Business Law Question Paper
Topic #3 Realty
Question #1: What is difference between realty and personalty? Answer: Realty includes buildings, land, and permanent structural components of a
building. In contrast Personalty is tangible property that is not classified as realty. Unlike realty, where there are a variety of credits available, there
are few credits available for personalty. Having said this, a taxpayer may elect to take a Sec. 179 deduction on the personalty in order to expense the
cost quicker, which may be beneficial.
Question #2: What impact does the election of a Sec. 179 have on a taxpayer's tax liability? Have there been any recent changes to the Sec. 179 limits?
Answer: A Sec. 179 deduction is an above the line reduction to the value of a taxpayers taxable income. Taxpayers may elect this deduction in order to
expense costs faster than the non–election alternative (Treasury Regulations, 1993). Once the taxpayer has elected to take this deduction, the amount of
the deduction is typically $500,000; however as of Jan 2015 the deduction limit was reduced to $25,000, ... Show more content on Helpwriting.net ...
1245 (Final, Temporary & Proposed Treasury Regulations , 1997). Specifically, when anasset is sold, the sale price is compared to the value of the
assets on the books. If the value of the asset on the books is greater than the sale price, a loss is incurred and it is recorded and taxed accordingly.
However, when the value of the asset on the books is less than the sale price, a gain has been recognized. At this point, the amount of the gain is
compared to the accumulated depreciation of the particular asset. This accumulated depreciation is reduced until the sale price and the book value are
equivalent. The amount of the reduction in accumulated depreciation is the amount of depreciation, which will be taxed as income. If, the sale price
exceeds the book value and the accumulated depreciation value, then a section 1231 gain is

Capital Leases and Operating Leases Essay
ACCT 3303| CAPITAL LEASE vs. OPERATING LEASE | |
Dr. Serge Ryno
ACCT 3303
December 2, 2011
Capital Lease vs. Operating Lease Firms often choose to lease long–term assets rather than buy them for a variety of reasons including the tax benefits
that are greater to the lessor than the lessees and leases offer more flexibility in terms of adjusting to changes in technology and capacity needs. Lease
payments create the same kind of obligation that interest payments on debt create, and have to be viewed in a similar light. If a firm is allowed to
lease a significant portion of its assets and keep it off its financial statements, an examination of the statements will give a very misleading view of the
company's financial strength. ... Show more content on Helpwriting.net ...
The better the financials look, the easier it is to get needed financing in the future. Since there is no ownership involved, operating leases offer a great
deal of flexibility. For example, a small business doesn't need to worry about equipment becoming obsolete. A company can simply lease newer
equipment. The ability to directly expense leasing costs provides some accounting benefit. When a company owns an asset, accounting rules dictate that
the property, plant or equipment must be depreciated and held on the balance sheet for the asset's useful life. In effect, this ties up the company's cash
flow and leverages the company to financiers. Operating leases are not subject to these constraints. One disadvantage of entering an operating lease
involves the higher level of expenses reported. Businesses who enter operating leases record a lease expense for each period throughout the duration of
the lease. These expenses appear on the company's income statement. The income statement reports the revenues earned for the period, the expenses
incurred and the net income for the period. Operating leases represent temporary arrangements between the lessor and the company. When the lease
expires, the terms of that lease become void. The lessor and the company spend time renegotiating the terms or ending the relationship. The company
needs to reconsider the lease and evaluate its options on a regular basis. This lack of continuity

2012 Bottle Up Inc Filing
INSTRUCTIONS FOR FILING 2012 U.S. S CORPORATION INCOME TAX RETURN May 12, 2014 SIGNATURE: An authorized officer of
your S corporation should sign and date the return at the bottom of the first page. DUE DATE: File your 2012 Form 1120S on or before: March
15, 2013 The IRS may treat tax returns that are lost in the mail as not filed on time, unless you send them by registered or certified mail. To avoid
the risk of your tax return being lost, mail it via (1) certified U.S. mail, return receipt requested, or (2) one of the private delivery services listed in the
IRS instructions under "When to File." Save the receipt, and you will be presumed to have timely filed your return – even if it is not received by the
IRS. FILING: File your 2012... Show more content on Helpwriting.net ...
Check if Form 2220 is attached 24 E N 25 Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed 25 T S 26
Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid 26 27 Enter amount from line 26 Credited to 2013
estimated tax G Refunded G 27 Sign Here Under penalties of perjury, I declare that I have examined this return, including accompanying schedules
and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based
on all information of which preparer has any knowledge. A Signature of officer Print/Type preparer's name Paid Preparer Use Only Date Preparer's
signature A May the IRS discuss this return with the preparer shown below (see instructions)? Title Yes Date Check if No PTIN self
–employed Firm's
name Firm's address G G Self–Prepared Firm's EIN G Phone no. BAA For Paperwork Reduction Act Notice, see separate instructions. SPSA0112

Acct553 W4 You Decide Memo
MEMORANDUM To: Mr. John Smith and Mrs. Jane Smith From: Sarah Gong Date: November 25, 2012 RE: 2011 Tax Strategy Dear John and
Jane, Thank you for the opportunity to work on your behalf for tax preparation this year. Per our previous discussion, I have prepared this memo as
a preliminary work on this year's tax strategy. The three main sections are constructed according to inquiries made by each of you individually and,
then, to conclude on the options available for you both and my recommendation. 1. John Smith tax issues a) The $300,000 of attorney's fee should be
included in gross income and subject to federal and state tax. The Internal Revenue Code Section 61 (IRC 61, 26 U.S.C. В§ 61) defines gross income
as all income from... Show more content on Helpwriting.net ...
c) Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit4. IRS uses the "3–of–5" test to
determine if you have profit motive. If your business made a profit in any three out of the past five consecutive years, it is presumed to have a
profit motive, and your activity will be likely considered as a business. Per our discussion, you are thinking about adding new equipment to your
activity, which is also evidence that your activity can be considered as a business. d) If your hobby activity produces income, you owe tax on it.
And if your hobby activity keeps bringing in income over years, you will have tax benefits to set up a separate business for the activity because
you can deduct ordinary and necessary expenses from the income to lower your taxable income. When you have loss, you can also use it as a tax
shelter to reduce your overall gross income (if you have other income sources). e) Yes, there may be an indirect benefit to John if he makes a $15,000
investment into Jane's business if John and Jane file "Married filing jointly tax return". Jane must use the $15,000 for business deductible purchases.
If the money sits in the bank it will not provide a tax benefit. f) Yes, Jane can depreciate the vehicle and her jewelry making machine. The equipment
can be depreciated with MACRS or

You Decide
memo to:| Mr. & Mrs. John smith| from:| carol johnson| subject:| tax issues| date:| September 29, 2012| | | | |
Dear Mr. & Mrs. John Smith:
After carefully evaluating your tax issues my staff and I have come to the following conclusions on the questions you presented us.
a. How is the $300,000 treated for purposes of federal tax income?
The $300,000 you earned is considered earned income; therefore, it should be reported as gross income on either a Schedule C of your individual
income tax return or if you have reported your company as being a LLC, you can file a LLC return.
b. How is the $25,000 treated for purposes of federal tax income?
The $25,000 would not be ... Show more content on Helpwriting.net ...
There are no tax benefits to John's income, but Jane's could use the $15,000 for purchase of equipment which could produce tax benefits that would
become part of their joint return. If she left them in her business bank account, there would be no benefit to either of them.
f. Can Jane depreciate her vehicle or jewelry–making equipment? How? She can use the standard mileage rate based on business miles. An alternative
method would be to depreciate her vehicle and declare that depreciation plus all auto expenses to the extent of business use, based on mileage. If
business miles amount to 60% of total miles, for example, then 60% of all expenses including depreciation would be allowable (IRS , 2012). Either
method requires Jane to track her business mileage.
The equipment can be depreciated by one of two methods: Section 179 allows for a full write off in the year of acquisition (subject to certain limits).
MACRS depreciation allows a systematic write off of equipment based on the type of asset. More business assets are either 5 year or 7 year property
(CompleteTax, 2012).
3. John and Jane Smith tax issue:
a. Should John and Jane file separate or joint tax returns? Typically, married individuals more tax benefits by filing jointly. Filing a separate return
provides relief from joint liability for taxes. However, married taxpayers who file separately are not eligible for many tax deductions and credits, and

Tax Chapter 13 Questions
True / False – Chapter 13
Maria defers $100 of gain realized in a section 351 transactions. The stock she receives in the exchange has a fair market value of $500. Maria 's tax
basis in the stock will be $400.вЂЁTrue вЂЁ
Control as it relates to a section 351 transaction is strictly defined to be 80 percent or more of the voting power of the stock of the corporation to
which property is transferred.вЂЁ False вЂЁ
The definition of property as it relates to a В§351 transaction includes money. True вЂЁ
To meet the control test under section 351, a taxpayer transferring property to a corporation must by himself own 80 percent or more of the
corporation 's voting stock and 80 percent of each class of nonvoting stock after the transfer even if there are ... Show more content on Helpwriting.net
...
True вЂЁ
Corporations can carry net operating losses back two years and forward 20 years. True вЂЁ
Bingo Corporation incurred a net operating loss in 2012. If it carries the loss back, it must first carry the loss back to offset its 2011 taxable income
and then it carries any remaining loss back to offset its 2010 taxable income.вЂЁ False вЂЁ
Net operating losses generally create permanent book–tax differences. False вЂЁ
Net capital loss carryovers but not carrybacks are deductible against capital gains in determining a corporation 's net operating loss for the
year.вЂЁTrue вЂЁ
Accrual–method corporations are not allowed to deduct charitable contributions unless they actually make payment to the charity by year end.вЂЁ
False вЂЁ
GenerUs Inc. 's board of directors approved a charitable cash contribution to FoodBank, a qualified non– profit organization, in November of 2012.
GenerUs made payment to FoodBank on February 2, 2013. GenerUs Inc. (a calendar–year corporation) may claim a deduction for the contribution on
its 2012 tax return. вЂЁTrue вЂЁ
NOL and capital loss carryovers are deductible in calculating the charitable contribution limit modified taxable income, while NOL and capital loss
carrybacks are not.вЂЁTrue вЂЁ
Corporations may carry excess charitable contributions forward five years, but they may not carry them back. вЂЁTrue вЂЁ
A corporation generally will report a favorable, temporary book–tax difference when it deducts a charitable contribution carryover.вЂЁTrue вЂЁ
Corporations are

121 Midterm 2 Fall 12
University of CaliforniaProf. Alan Cerf Haas School of BusinessMidterm 2 exam, v. A UGBA 121Fall 2012Name ______________Q &
A_______________________ Date ______________ Please sign the following: I pledge that I will not receive help from anyone, nor will I give help
to anyone during this exam. __________________________________________________________________ SIDstudent's signature For problems
1–3, write answers on exam and show calculations to justify your answers. Question I.10 pts Rod is employed as an auditor by a CPA firm. On most
days, he commutes by auto from his home to the office (18 miles round trip). During one month, however, he has an extensive audit assignment closer
to home. For this... Show more content on Helpwriting.net ...
Discuss Joe's tax objectives and all tax issues related to his actions. (Show calculations.) ANS:Joe is attempting to accelerate his charitable
contribution deduction into 2013. There are several potential advantages to accelerating the deduction by donating the land in 2012. п‚· His
contribution will be deducted in a tax year when his marginal tax rate is 33% rather than 25%. п‚· He might avoid disallowance of part of the
deduction due to AGI percentage limitations because his contribution base will be higher in 2012 than in 2013. п‚· He can deduct the fair market
value of the land without recognizing the $40,000 appreciation as income. п‚· He can step up his basis in the land from $10,000 to $50,000 when
he reacquires it in 2012. Joe's plan will generate many favorable outcomes if he does not run afoul of the IRS. While it does not appear that Joe has
done anything that does not comply with the tax law, the IRS might collapse the transaction; that is, focus on the outcome and ignore the steps
involved. The outcome is that Joe has transferred $50,000 cash to his church. The IRS might disallow the deduction for the land contribution in 2011
and treat the transaction as a cash contribution in 2012. In this case, Joe's basis for the purchased land would be $10,000 and his deduction would be
at the lower 2012 marginal tax rate. Question 5.XX pts.? John and Jenny decide to give $75,000 to two and the spouses of the

Acc553 Week 4 You Decide Project
MEMORANDUM
To:John and Jane Smith
From:XXXXXX, CPA Near Lakes City
Date:February 7, 2013
Dear Mr. & Mrs. Smith,
Thank you for coming to our offices and allowing us to review and discus your concerns regarding your tax questions. I have been assigned to reply to
your questions and I have listed my recommendations below. After you both have reviewed these recommendations, please contact me so we can go
over any additional questions you may have.
Mr. Smith's questions:
1(a) How is the $300k treated for purposes of Federal tax income?
According to the IRC В§61(a)(1), "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived,
including (but not limited to) the ... Show more content on Helpwriting.net ...
Depreciation is the loss in value of an asset / building over time due to wear and tear, physical deterioration and age. Depreciation is treated as an
expense and is a line item on your income statement but must be applied only to the building and not the land (since land does not wear out over
time). You will be able to depreciate the building over a period of 39 years using the Modified Accelerated Cost Recovery System (MACRS). IRS
Publication 946 contains the rules and guidelines governing depreciation of non–residential or commercial property.
Ms. Smith's questions:

2(a) What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for federal income tax
purposes?
Unfortunately, paying down your current mortgage and assuming a new mortgage will not result in different tax consequences for you or Mr. Smith.
The only possibly benefit to you would have to be based on the amount of interest (based on the rate) you are paying on your current debt and the
amount you would have to pay on the new debt or loan.
If you were to sale your current residence, you could be eligible to exclude up to $500k (married filing jointly) of that gain from your income. Of
course, this gain would apply to the tax year in which the property was sold and I believe you are looking for tax benefits

Basic Rules Of Tax Practices
Keeping these records in order helps the business to run smoothly and makes closing the year easier when dealing with the state of California and the
federal tax requirements. It's never too early to review your financial records for year–end. Let' start with a few basic rules of good tax practices:
1.Prepare Employer Taxes State and federal regulations govern every business for year–end tax filings. The biggest challenge for small business
owners is running the business and keeping up with the tax schedules – monthly or quarterly payments–W–2s and 1099s–estimated tax remittances.
The government is not forgiving when it comes to taxes–make an effort to incorporate good tax practices into your business strategy and talk with your
tax... Show more content on Helpwriting.net ...
3.Count the Inventory You inventory is valued at its purchase cost– it's a good idea to take a pre year–end inventory accounting for items sold,
discarded or destroyed. It gives you an idea of the amount of capital your company has invested in inventory. Be sure to make any adjustment in your
company reports. Inventory losses are deductions against your total income sales – helping to reduce tax liabilities. Internal Revenue Service (IRS)
accepts cost method of inventory or your retail sale price minus the mark–up percentage to determine cost. If you have made business purchases or
disposed of inventory this year, be sure to have the receipts or transaction details to take advantage of these business deductions. It can get confusing,
work with a small business tax expert to remove some of the burden off your shoulders. 4.Organize IRS Tax Forms Outsourcing saves payroll taxes,
but as the business owner, you are responsible for issuing 1099 forms for independent contractors– reporting earnings of $600 or more during the year.
Under Section 13052.5 of the California Unemployment Insurance Code, penalties incur for failing to–do–so and increase per occurrence. The state of
California has its own rules for 1099 and 1098 forms: Forms 1098, 1098–T, 1099–A, 1099–B, 1099–C, 1099–DIV, 1099–INT, 1099–MISC,
1099–PATR, 1099
–R and 1099–S.

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