Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 57CP
To determine
Compute Person R’s amount of net tax payable or refund due for 2018.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6780. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason’s Social Security number is 111-11-1112, and June’s is 123-45-6788. Roberta has never owned or used any virtual currency. She does not want to contribute $3 to the Presidential Election Campaign Fund.
Roberta, an advertising executive, earned a salary from ABC Advertising of $80,000 in 2019. Her employer withheld $9,000 in Federal income tax and $3,100 in state income tax.
Roberta has legal custody of Jason and June. The divorce decree provides that Roberta is to receive the dependency deductions for the children. Jason lives with his father during summer vacation. Wayne indicates that his expenses for Jason are $5,500. Roberta can document that she spent $6,500 for Jason’s support during 2019. In prior years,…
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason’s Social Security number is 111-11-1111, and June’s is 123-45-6788. Roberta does not want to contribute $3 to the Presidential Election Campaign Fund.
Roberta, an advertising executive, earned a salary of $80,000 in 2014. Her employer withheld $9,000 in Federal income tax and $3,100 in state income tax.
Roberta has legal custody of Jason and June. The divorce decree provides that Roberta is to receive the dependency deductions for the children. Jason lives with his father during summer vacation. Wayne indicates that his expenses for Jason are $10,500. Roberta can document that she spent $6,500 for Jason’s support during 2014. In prior years, Roberta gave a signed Form 8332 to Wayne regarding Jason. For 2014,…
Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon does not want $3 to go to the Presi-dential Election Campaign Fund.
Devon’s wife, Ariane, passed away in 2014. Devon’s son, Tom, who is age 18, resides with Devon. Tom’s Social Security number is 123-45-6788.
Devon owns a sole proprietorship for which he uses the accrual method of account-ing and maintains no inventory; the business operates as Devon’s Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2018 are as follows.
Sales revenue $740,000
Cost of goods sold (based on purchases for the year) 405,000
Salary expense 88,000
Rent expense 30,000
Utilities 8,000
Telephone 6,500
Advertising 4,000
Bad debts 5,000
Depreciation* 21,000
Health insurance** 26,000
Accounting and legal fees 7,000
Supplies 1,000
* New office equipment ($21,000); Devon…
Chapter 6 Solutions
Individual Income Taxes
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Classify each of the following expenditures paid...Ch. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQ
Ch. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Prob. 13DQCh. 6 - Prob. 14DQCh. 6 - Linda operates an illegal gambling operation....Ch. 6 - Prob. 16DQCh. 6 - Melissa, the owner of a sole proprietorship, does...Ch. 6 - Prob. 18DQCh. 6 - Blaze operates a restaurant in Cleveland. He...Ch. 6 - Prob. 20DQCh. 6 - Prob. 21DQCh. 6 - Ray loses his job as a result of a corporate...Ch. 6 - Lavinia incurs various legal fees in obtaining a...Ch. 6 - Prob. 24DQCh. 6 - Prob. 25DQCh. 6 - Shanna, a calendar year and cash basis taxpayer,...Ch. 6 - Prob. 27CECh. 6 - Maud, a calendar year taxpayer, is the owner of a...Ch. 6 - Vella owns and operates an illegal gambling...Ch. 6 - Printer Company pays a 25,000 annual membership...Ch. 6 - Stanford owns and operates two dry cleaning...Ch. 6 - Tobias has a brokerage account and buys on the...Ch. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Janice, age 32, earns 50,000 working in 2019. She...Ch. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Duck, an accrual basis corporation, sponsored a...Ch. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Terry traveled to a neighboring state to...Ch. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Brittany Callihan sold stock (basis of 184,000) to...Ch. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57CPCh. 6 - Prob. 58CPCh. 6 - Prob. 1RPCh. 6 - Prob. 2RPCh. 6 - Prob. 3RPCh. 6 - Which of the following is a deduction for AGI? a....Ch. 6 - Which of the following is not a deduction for AGI?...Ch. 6 - David is a CPA and enjoys playing the lottery....Ch. 6 - Prob. 4CPACh. 6 - Prob. 5CPACh. 6 - Prob. 6CPA
Knowledge Booster
Similar questions
- John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony of 6,000 per year to Katy and child support of 12,000. The 12,000 of child support covers 65% of Katys costs of rearing Kendra. Kendras Social Security number is 123-45-6789, and Katys is 123-45-6788. Johns mother, Sally, lived with him until her death in early September 2019. He incurred and paid medical expenses for her of 15,588 and other support payments of 11,000. Sallys only sources of income were 5,500 of interest income on certificates of deposit and 5,600 of Social Security benefits, which she spent on her medical expenses and on maintenance of Johns household. Sallys Social Security number was 123-45-6787. John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is 95,000. The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, 9,500 was withheld for Federal income taxes and 4,000 was withheld for state income taxes. In addition to his salary, Johns employer provides him with the following fringe benefits. Group term life insurance with a maturity value of 95,000; the cost of the premiums for the employer was 295. Group health insurance plan; Johns employer paid premiums of 5,800 for his coverage. The plan paid 2,600 for Johns medical expenses during the year. Upon the death of his aunt Josie in December 2018, John, her only recognized heir, inherited the following assets. Three months prior to her death, Josie gave John a mountain cabin. Her adjusted basis for the mountain cabin was 120,000, and the fair market value was 195,000. No gift taxes were paid. During the year, John reported the following transactions. On February 1, 2019, he sold for 45,000 Microsoft stock that he inherited from his father four years ago. His fathers adjusted basis was 49,000, and the fair market value at the date of the fathers death was 41,000. The car John inherited from Josie was destroyed in a wreck on October 1, 2019. He had loaned the car to Katy to use for a two-week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of 16,000, the fair market value of the car on October 1, 2019. On December 28, 2019, John sold the 300 acres of land to his brother, James, for its fair market value of 160,000. James planned on using the land for his dairy farm. Other sources of income for John are: Potential itemized deductions for John, in addition to items already mentioned, are: Part 1Tax Computation Compute Johns net tax payable or refund due for 2019. Part 2Tax Planning Assume that rather than selling the land to James, John is considering leasing it to him for 12,000 annually with the lease beginning on October 1, 2019. James would prepay the lease payments through December 31, 2019. Thereafter, he would make monthly lease payments at the beginning of each month. What effect would this have on Johns 2019 tax liability? What potential problem might John encounter? Write a letter to John in which you advise him of the tax consequences of leasing versus selling. Also prepare a memo addressing these issues for the tax files.arrow_forwardDevon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon does not want 3 to go to the Presidential Election Campaign Fund. Devons wife, Ariane, passed away in 2014. Devons son, Tom, who is age 18, resides with Devon. Toms Social Security number is 123-45-6788. Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory; the business operates as Devons Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2018 are as follows. Other income received by Devon includes the following. During the year, Devon and his sole proprietorship were involved in the following property transactions. Stock transactions were reported to Devon on Form 1099B; basis was not reported to the IRS. a. Sold Blue, Inc. stock for 45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for 50,000. b. Received an inheritance of 300,000 from his uncle, Henry. Devon used 200,000 to purchase Green, Inc. stock on May 15, 2018, and invested 100,000 in Gold, Inc. stock on May 30, 2018. c. Received Orange, Inc. stock worth 9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was 5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. Devon sold the stock on July 1, 2018, for 22,000. d. On July 15, 2018, Devon sold one-half of the Green, Inc. stock for 40,000. e. Devon was notified on August 1, 2018, that Yellow, Inc. stock he purchased from a colleague on September 1, 2017, for 52,500 had become worthless. Although he understood that investing in Yellow was risky, Devon did not anticipate that the corporation would declare bankruptcy. f. On August 15, 2018, Devon received a parcel of land in Phoenix worth 220,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth 245,000, he also received 25,000 cash. Devons adjusted basis for the Tucson parcel was 210,000. He originally purchased it on September 18, 2015. g. On December 1, 2018, Devon sold the condominium in which he had been living for the past 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and moved into a rented townhouse. The sales price was 480,000, selling expenses were 28,500, and repair expenses related to the sale were 9,400. Devon purchased the condominium for 180,000. Devons potential itemized deductions, exclusive of the aforementioned information, are as follows. During the year, Devon makes estimated Federal income tax payments of 35,000. Compute Devons lowest net tax payable or refund due for 2018 assuming that he makes any available elections that will reduce the tax. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, B, C, D, and SE and Forms 4562, 8824, and 8949. Suggested software: ProConnect Tax Online.arrow_forwardAshley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2019 traveling in Europe and was not a college student. He had gross income of $4,655 in 2019. Bill paid $4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the $4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2019, and many of her expenses were not reimbursed by her health insurance. Ashley owns Panda Enterprises, LLC (98-7654321), a data processing service that she reports as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2019 Form 1040, Schedule C for Panda Enterprises shows revenues of $315,000,…arrow_forward
- Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2020 traveling in Europe and was not a college student. He had gross income of $4,655 in 2020. Bill paid $4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the $4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2020, and many of her expenses were not reimbursed by her health insurance. Ashley owns Panda Enterprises LLC (98-7654321), a data processing service that she reports as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2020 Form 1040, Schedule C for Panda Enterprises shows revenues of $315,000,…arrow_forwardDevon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon did not engage in any virtual currency transactions during the year, and he does not want $3 to go to the Presidential Election Campaign Fund. Devon's wife, Ariane, passed away in 2015. Devon's son, Tom, who is age 18, resides with Devon. Tom's Social Security number is 123-45-6788. Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory; the business operates as Devon’s Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2019 are as follows: Sales revenue $740,000 Cost of goods sold (based on purchases for the year) 405,000 Salary expense 88,000 Rent expense 30,000 Utilities 8,000 Telephone 6,500 Advertising 4,000 Bad debts 5,000 Depreciation* 21,000 Health insurance** 26,000 Accounting and legal fees 7,000…arrow_forwardJanice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer.She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6782. Janice’s parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.During 2018, Janice reported the following income and expense items connected with her business. Income from sale of articles $85,000Rent 16,500Utilities 7,900Supplies 1,800Insurance…arrow_forward
- 57. Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6780. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason’s Social Security number is 111-11-1112, and June’s is 123-45-6788. Roberta has never owned or used any virtual currency. She does not want to contribute $3 to the Presidential Election Campaign Fund. Roberta, an advertising executive, earned a salary from ABC Advertising of $80,000 in 2019. Her employer withheld $9,000 in Federal income tax and $3,100 in state income tax. Roberta has legal custody of Jason and June. The divorce decree provides that Roberta is to receive the dependency deductions for the children. Jason lives with his father during summer vacation. Wayne indicates that his expenses for Jason are $5,500. Roberta can document that she spent $6,500 for Jason’s support during 2019. In prior…arrow_forwardRick and Cindy Davis are married and file a joint return. They live at 3223 Taccone Ave., Apt. 37, Medford, MA 02155. Rick is an elementary school teacher in the Medford Public School system and Cindy is currently a homemaker after losing her job in late 2019. Cindy’s social security number is 412-34-5671 (date of birth 10/11/1981) and Rick’s is 412-34-5670 (date of birth 3/19/1979). Rick’s W-2 contained the following information: Wages (box 1) = $ 70,245.55 Federal W/H (box 2) = $ 5,924.43 Social security wages (box 3) = $ 70,245.55 Social security W/H (box 4) = $ 4,355.22 Medicare wages (box 5) = $ 70,245.55 Medicare W/H (box 6) = $ 1,018.56 Rick and Cindy have interest income of $237 from a savings account at Boston State Bank. Cindy also owns stock in Microsoft. Cindy received $265 in qualified dividends from Microsoft in 2020. Rick was divorced in 2014 and pays his ex-wife (Mary Tortelli) alimony. Their original divorce decree, which remains unchanged, dictates…arrow_forwardJane Smith, age 40, is single and has no dependents. She is employed as a legalsecretary by Legal Services, Inc. She owns and operates Typing Services located nearthe campus of Florida Atlantic University at 1986 Campus Drive, Boca Raton, FL 33434.Jane is a material participant in the business. She is a cash basis taxpayer. Jane lives at2020 Oakcrest Road, Boca Raton, FL 33431-Jane’s Social Security number is 123-45-6781. Jane indicates that she wants to designate $3 to the Presidential ElectionCampaign Fund. Jane had health insurance for all months of 2018. During 2018, Janehad the following income and expense items:a. $100,000 salary from Legal Services, Inc.b. $20,000 gross receipts from her typing services business.c. $700 interest income from Third National Bank.d. $1,000 Christmas bonus from Legal Services, Inc.e. $60,000 life insurance proceeds on the death of her sister.f. $5,000 check given to her by her wealthy aunt.g. $100 won in a bingo game.h. Expenses connected with the…arrow_forward
- Richard McCarthy (born 2/14/1966; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1968; Social security number 101-21-3434) have a 19-year-old son Jack, (born 10/2/2001; Social Security number 555-55-1212), who is a full-time student at the University of Key West. The McCarthys also have a 12-year-old daughter Justine, (Social Security number 444-23-1212), who lives with them. The McCarthys can claim a $2,000 child tax credit for Justine and a $500 other dependent credit for Jack. The McCarthys did not receive an EIP in 2020. Richard is the CEO at a paper company. His 2020 Form W-2 is provided. Christine is an optometrist and operates her own practice ("The Eyes of March") in town as a sole proprietor. The shop address is 1030 Morgan Highway, Clarks Summit, PA 18411 and the business code is 621320. Christine keeps her books on the accrual basis and her bookkeeper provided the following information: Gross sales $270,500 Returns 9,000 Inventory:…arrow_forwardTim and Sarah Lawrence are married and filing a joint return. Tim's social security number is 123-45-6789, and Sarah's social security number is 111-11-1111. They reside at 100 Olive Lane, Covington, LA 70434. They have two dependent children, Sean and Debra, ages 12 and 16. Tim is a self-employed business person (sole proprietor of an unincorporated business) and Sarah a corporate executive. Tim has the following income and expenses from his business: Gross income $325,000Business Expenses $201.000 Records Related to Sarah's employment show the following:Salary $145,000Unreimbursed Travel (including $200 in meals) $1,600 Other pertinent information for the tax year include the following:Proceeds from the sale of stock acquired July 15, 2018 (cost $12,000) and sold August 1, 2018 for $9,800Proceeds from sale of stock acquired on September 18, 2017 (cost $5,000) and sold on October 5, 2018 for $3,800Wages paid to full-time domestic workers for housekeeping and child supervision…arrow_forwardRick and Cindy Davis are married and file a joint return. They live at 3223 Taccone Ave., Apt. 37, Medford, MA 02155. Rick is an elementary school teacher in the Medford Public School system and Cindy is currently a homemaker after losing her job in late 2019. Cindy’s social security number is 412-34-5671 (date of birth 10/11/1981) and Rick’s is 412-34-5670 (date of birth 3/19/1979). Rick’s W-2 contained the following information: Wages (box 1) = $ 70,245.55 Federal W/H (box 2) = $ 5,924.43 Social security wages (box 3) = $ 70,245.55 Social security W/H (box 4) = $ 4,355.22 Medicare wages (box 5) = $ 70,245.55 Medicare W/H (box 6) = $ 1,018.56 Rick and Cindy have interest income of $237 from a savings account at Boston State Bank. Cindy also owns stock in Microsoft. Cindy received $265 in qualified dividends from Microsoft in 2020. Rick was divorced in 2014 and pays his ex-wife (Mary Tortelli) alimony. Their original divorce decree, which remains unchanged, dictates that Rick pay Mary…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT