1 (A) The question is how should a $300‚000 fee collected by John Smith after two years of work on a personal injury case with a $2‚000‚000 jury verdict in his clients favor‚ be reported for tax purposes. Under Internal Revenue Code (IRC) 61‚ section (a) subsection (1) gross income is defined as “Compensation for services‚ including fees‚ commissions‚ fringe benefits‚ and similar items.” This section of the tax code is very comprehensive (with 15 descriptive subsections) to almost all forms
Premium Taxation in the United States Tax Internal Revenue Service
a. True b. False ANSWER: False RATIONALE: Deductions are a matter of legislative grace. The only deductions allowed are those specifically provided for by statute‚ rulings‚ etc. 2. Mitch is in the 28% tax bracket. He may receive a different tax benefit for a $2‚000 expenditure that is classified as a deduction from AGI than he will receive for a $1‚000 expenditure that is classified as a deduction for AGI. a. True b. False ANSWER: True RATIONALE: The value of the tax benefit to Mitch
Premium Taxation in the United States
the mortgage (debt) and assuming a new mortgage (debt) for Federal income tax purposes? b. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John’s case? c. Does Jane have a business or hobby? Why is this distinction important? d. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry making activities? e. What tax benefits would John realize if he invested $15‚000 in Jane’s jewelry making?
Premium Taxation in the United States Tax Taxation
Exeter- 1031 Exchange LLC Justia.com - U.S. Supreme Court Center. (2013). Deputy v. Du Pont - 308 U.S. 488 (1940). Retrieved on February 2‚ 2013 from http://supreme.justia.com/cases/federal/us/308/488/case.html Law Cornell Overview of Deductions and Losses. (2012). Retrieved on February 2‚ 2013 from http://custom.cengage.com/pktax/09_edition/Ch7ITAX.pdf Revenue Rulings‚ Revenue Procedures‚ Notices and Announcements Tax Almanac. (2005‚ May 11). Treasury Regulations‚ Subchapter A‚ Sec. 1.61-3. Retrieved
Premium Taxation in the United States
The court says that although it is not significant for the purpose of proving whether it is business‚ however it is significant in testing if the operations are a hobby or not. Personally I do not agree to the general rule. It is because even if you make a profit of $1‚ it is still profit‚ it is money and is business. What if a person opens a convenient store far out west where there isn¡¦t a lot of customers‚ but
Premium Law United States Australia
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
Premium Taxation in the United States Depreciation Income tax
in a portfolio of 10 company startups. He tries to compensate losses with the profit. Even though he faces losses in other startups‚ he balances the loss and gain huge profit from the remaining investments. The optimistic view which he uses to evaluate is‚ expecting losses from 3-4 companies‚ modest returns from 3-4 companies and finally profits for the remaining 1 or 2 companies. They focus on higher profit ones to cover their losses. Even though angel investors are high net worth individuals‚ they
Premium Investment Venture capital Rate of return
Musical Mold There are many things we learn of Sonny and his nameless brother in Sonny’s Blues. We learn they’re mannerisms‚ hobbies‚ occupations‚ and even their addictions. It seems we learn nearly everything about the pair; minus the narrators name‚ as previously stated. Hearing of their histories and the pains they’ve under gone‚ we see how they deal with their pain‚ which often truly tells character. Sonny’s Blues isn’t a story of two brothers living in a rough city; one of whom is a
Premium
Memo To: John and Jane Smith From: Date: 10/9/14 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? The $300‚000 that John received from the court case is considered earned income for the year. The $300‚000 is earned income for John Smith and will be reported as gross income either on Schedule C of the individual return or as gross income on the LLC return. Applicable Law and Analysis Section
Premium Taxation in the United States
Fight to Live‚Live to Fight The documentary Thai Boxing: A Fighting Chance highlights another dimension of muay thai- one that is not a mere PE or hobby‚ but rather an occupation‚ a human cockfight even. It is a profession many Thai kids see as an effective means to generate income in order for them to eke out a meager living. The sacrifices each of the featured fighters had to do (grueling trainings‚ camps away from their family‚ health risks) in their journey as muay thai fighters can
Free Muay Thai Thailand Boxing