Sam and his wife Ann purchased a home in Lubbock‚ Texas in 1980 for $100‚000. Their original home mortgage was for $90‚000. The house has a current market value of $175‚000 and a replacement value of $200‚000. They still owe $55‚000 on their home mortgage. Sam and Sally are now constructing their balance sheet. How should their home be reflected on their current personal balance sheet? a.) $200‚000 asset and $55‚000 liability b.) $200‚000 asset and $90‚000 liability c.) $175‚000 asset and $55
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LLC. He will get a deduction from gross income for half of the self employment tax liability on the self employment tax. John currently has a lease payment that provides him a deduction of $42‚000 per year or $3‚500*12 (26 USC § 162 (a) 3) (Law Cornell‚ 2012). He is allowed this deduction since the lease is required for his business to continue‚ and he has no title or equity in the building. If he decides to purchase the building‚ then he will no longer have this deduction. Capital purchases
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CHILD TAX CREDIT Individual taxpayers are permitted to take tax credit based on dependent children‚ under 17. Credit $1000 per child. AGI $110000 joint‚ 55000 separate‚ $75000 single. Phased out by $50 each $1000. * Married‚ joint‚ 2 children. AGI $118700. Child tax credit $1550 (1000x2=2000-450) {50x{(118700-110000)/1000]} DEPENDENT CARE CREDIT Under 13/ unable to care for self. If divorced child cant be living with the creditor. Divorced mother with custody may entitle to credit even
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consider the cost of insurance on the automobile. *a. True b. False 1039. A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking. *a. True b. False 1040. A deduction for
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does not qualify for the child tax credit. Spouse B’s mother does not qualify as a dependant because she does not meet the minimum requirement of having half of her support come from the family. The family would be able to take a higher amount of deductions and therefore pay less in taxes if they choose Married Filing Jointly. By filing jointly the couple is able to take advantages of such credits as the child tax credit‚ the Lifetime Learning Credit & the hope credit. They are also able to save more
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withholdings is lost and new quarterly payments on income and self employment taxes must be made. c) Paul purchased a personal residence will have a tax position change because you will have a new mortgage interest and property tax deductions cause the standard deductions to be replaced by itemization on Schedule A. 7. Distinguish between taxes that are proportional and those that are progressive. Proportional taxes – The tax rate remains constant for any given income level. Progressive taxes-The
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Case : “week 8 federal taxation discussion” Employee Business Expenses" Please respond to the following: As part of his contract at his new job‚ Jim is provided a company car and gas card to go back and forth to work. He sometimes uses the car for out-of-town travel approximately once a month. Jim also uses the car and the gas card for his family vacations‚ dinner‚ etc. Question: Explain the applicable tax law regarding employee compensation and the criteria for deducting expenses Make at least
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for what he spent on the case. c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? John would like to reduce his taxable income. One way to do so is to take advantage of itemized deductions. Itemized deductions include expenses for health care‚ state and local taxes‚ personal property taxes (such as car registration fees)‚ mortgage interest‚ gifts to charity‚ job-related expenses‚ tax preparation fees‚ and investment-related expenses. (http://taxes
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TO: John Smith Esq‚ & Jane Smith FROM: NearLakes City CPA RE: Smith tax issues Facts John Smith is a Lawyer that just won a two year lawsuit and collected fees of $300‚000 paid to his firm along with the $25‚000 for recovery of expenses that was paid up front. John is thinking about purchasing his office building that he is currently leasing at $3‚500 per month. Jane Smith wishes to payoff and sell current home and purchase a new one. She uses her primary vehicle to transport handcrafted
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$300K because presumably he has business deductions. Issue b) How is the $25‚000 treated for purposes of federal tax income? Applicable Law & Analysis: The $25‚000 is the reimbursement John for the expenses that were paid in advance for this client. Under Code§1.61-3(a)‚ the funds are considered as incidental income. John would have to maintain the receipts from the expenses that he has incurred so that the proceeds will have a balancing deduction. The expenses were necessary for his business
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