Homework
4-6. The $5,000 will be included in the taxpayer’s gross income in 2014. A check received is generally considered a cash equivalent and, upon receipt, must be recognized as income by a cash basis taxpayer.
28. $10,000 @ 6% x 5 years = $13,382. Tax at 28% on interest = $947, After-tax proceeds = $12,435
$10,000 @ 5.5% x 5 years = $13,070. Therefore this bond is a better deal.
The land needs to earn at least $3070 after tax to beat the tax-free bond. But tax at 15% will be levied on the gain. The before tax gain is 3070 / (1 - .15) = 3611. Therefore the land must increase at least $3611 in value in order to beat the best bond.
Ed’s and his widow’s gross income is $22000 plus the salary of Ed or his wife prior to his death
42.
Faye’s gross income: $129,200
Gary’s gross income: $129,200
Heidi’s gross income: $129,200
47. Alicia would receive a before-tax amount equal to $280,000. (560,000/2). Rafel would receive a before-tax amount equal to $280,000 (same as a.) The $17,600 Rafel pays Alicia is considered part of the property settlementItem and, therefore, would not be deductible by Rafel. Rafel's basis in the investment assets he receives will be $160,000. Therefore, if the investments were sold for their current value, Rafel would have a $250,000 taxable gain. (Fair market value $410,000- Investment cost 160,000= $250,000 Gain)
Chapter 5: 17, 25, 35, 40, and 57
17:
Let the salary be X
Net receipt from 1st offer=0.75X+9000
So as per the offer from 2nd employer
X=0.75X+9000
or 0.25X=9000 or X=9000/0.25=36000
So the salary offer of 2nd employer has to be 36000
25.
35. If Adrian is not a degree candidate the amounts for tuition books and educational supplies are not taxable, biut Eoom ad board would be taxable. For 2013: $6000 scholarship -$3600 Tuition - $1100 Books and educational supplies = $1300 taxable part
For 2014: $7000 scholarship - $3700 tuition - $1200 Books and educational supplies = $2100 taxable part of scholarship.
40 Each employee’s income,
28. $10,000 @ 6% x 5 years = $13,382. Tax at 28% on interest = $947, After-tax proceeds = $12,435
$10,000 @ 5.5% x 5 years = $13,070. Therefore this bond is a better deal.
The land needs to earn at least $3070 after tax to beat the tax-free bond. But tax at 15% will be levied on the gain. The before tax gain is 3070 / (1 - .15) = 3611. Therefore the land must increase at least $3611 in value in order to beat the best bond.
Ed’s and his widow’s gross income is $22000 plus the salary of Ed or his wife prior to his death
42.
Faye’s gross income: $129,200
Gary’s gross income: $129,200
Heidi’s gross income: $129,200
47. Alicia would receive a before-tax amount equal to $280,000. (560,000/2). Rafel would receive a before-tax amount equal to $280,000 (same as a.) The $17,600 Rafel pays Alicia is considered part of the property settlementItem and, therefore, would not be deductible by Rafel. Rafel's basis in the investment assets he receives will be $160,000. Therefore, if the investments were sold for their current value, Rafel would have a $250,000 taxable gain. (Fair market value $410,000- Investment cost 160,000= $250,000 Gain)
Chapter 5: 17, 25, 35, 40, and 57
17:
Let the salary be X
Net receipt from 1st offer=0.75X+9000
So as per the offer from 2nd employer
X=0.75X+9000
or 0.25X=9000 or X=9000/0.25=36000
So the salary offer of 2nd employer has to be 36000
25.
35. If Adrian is not a degree candidate the amounts for tuition books and educational supplies are not taxable, biut Eoom ad board would be taxable. For 2013: $6000 scholarship -$3600 Tuition - $1100 Books and educational supplies = $1300 taxable part
For 2014: $7000 scholarship - $3700 tuition - $1200 Books and educational supplies = $2100 taxable part of scholarship.
40 Each employee’s income,