ACCT 323 7980 INCOME TAX I (Spring 2016) WEEK 4 HOMEWORK 1) In


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Accounting assignment, please answer #1-10, Thank you. ACCT Week 4 Homework.pdf ACCT 323 7980 INCOME TAX I (Spring 2016) WEEK 4 HOMEWORK 1) In the current tax year, Gunther earned $125,000 from his job as a civil engineer. In addition, he received $30,000 of income from Activity A, and lost $40,000, and 20,000 from Activities B and C respectively. Activities A, B, and C are passive activities that Gunther acquired in the current year. What amount of loss may Gunther deduct on his current year taxes with respect to each activity? What amount of loss, if any, must be carried over to the subsequent year for each activity? 2) During the current year, Beth and Bill, who file a joint return, incurred the following items of income and loss: Salary $ 130,000 Activity A (passive) 10,000 Activity B (rental real estate/nontrade or business) (30,000) Activity C (rental real estate/nontrade or business) (20,000) Beth and Bill actively participate in activities B and C, and they own 100% of each rental property. a) What is their AGI for the year? b) What is the amount of suspended losses, if any, that may be carried over with respect to each activity? 3) In the current tax year, Neil’s personal automobile was totaled in a traffic accident. Neil had purchased the automobile two years earlier for $28,000. The FMV of the automobile just prior to the accident was $18,000. The automobile is now worthless. Neil received a $14,000 insurance check in settlement of his accident claim. Later that same year, a thief broke into Neil’s home and took several antiques purchased several years ago for $8,000. Their current FMV at the date of the theft was $12,000. The antiques were not insured. Neil’s AGI for the current year is $60,000. What is the amount of Neil’s deductible casualty loss in the current year? 4) In 2013, Sarah loans Seymour $5,000 for his use in establishing his business. As Seymour has no other assets and needs cash to establish the business, the loan agreement provides that Seymour will repay the $5,000 debt to Sarah with interest at the prevailing rate over a five-year period. Seymour’s business is unsuccessful, and he files for bankruptcy in 2014. By the end of 2014, it is estimated that Seymour’s creditors will receive only 20% of the amount they are owed. In 2015, the bankruptcy proceedings are closed, and the creditors receive 10% of the amount due on Seymour’s debt obligations. What is Sarah’s bad debt deduction for 2014? 2015? How is Sarah’s bad debt deduction, if any, characterized? 5) During 2015, Kiran, a single taxpayer, reported the following income and expense items relating to her interior design business: Revenues $52,000 Cost of Goods Sold 41,000 Advertising 3,300 Office supplies 1,700 Rent 13,800 Contract labor 28,000 Kiran also worked part-time during the year, earning $13,500. She reports a long-term capital gain of $4,200, and a short-term capital loss of $3,800. Her itemized deductions total $5,200. a) What is Kiran’s taxable income or loss for the year? b) What is Kiran’s NOL for the year? 6) Brandy is a self-employed consultant who solicits business from numerous clients and receives consulting fees as income. During the current year, Brandy incurred the following expenditures: Airfare & lodging while away overnight $ 4,000 Business meals while traveling at which business was discussed 1,000 Local business transportation costs for automobile, parking & tolls 2,000 Commuting expenses 1,000 Local entertainment of clients 2,000 Total $ 10,000 a) Which of the expenditures listed above, if any, are deductible by Brandy? b) Which of the above items are classified as For AGI and From AGI deductions? c) How would your answers to parts (a) and (b) change if Brandy were an employee rather than self-employed and none of the above expenditures were reimbursed by her employer? 7) On February 20, 2015, Charles, who is single and age 32, establishes a traditional deductible IRA and

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