Megan operates a house
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- Megan operates a housecleaning business as a sole proprietorship. She oversees a team of 10 cleaning personnel, markets the business, and provides supplies and equipment. The business has been generating net taxable profits of $50,000 per year, before considering the QBI deduction. As a sole proprietor, Megan qualifies for the 20 percent deduction, reducing taxable income from the business to $40,000. Required: a. Assume that Megan's marginal tax rate on ordinary income is 35 percent and that she has no pressing need for cash flow from this business. Should Megan consider incorporating and operating the business through a C corporation? Fill the below table to justify your answers. (Ignore any payroll or self-employment tax considerations.) Income tax liability if operated as a C corporation Income tax savings Should Megan consider incorporating and operating the business through a C corporation? X Answer is complete but not entirely correct. b. How would your conclusion in part (a)…Windsor is employed at Rockstar Music. Windsor is receiving education assistance of $6,050 per year from Rockstar Music to complete a bachelor's degree from an accredited college. Required: How much of that assistance is taxable? Taxable assistance D BLily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2023, she sells the following long-term assets used in her business: Asset Building Equipment Sales Price $ 233,400 83,400 Description Taxable income Tax liability Cost $ 203,400 151,400 Lily's taxable income before these transactions is $193,900. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Accumulated Depreciation $ 55,400 26,400 Amount
- Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2021, she sells the following long-term assets used in her business: Asset Building Equipment Sales Price $ 233,400 83,400 Description Taxable income Tax liability Lily's taxable income before these transactions is $193,900. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Cost $ 203,400 151,400 $ Amount Accumulated Depreciation $ 55,400 26,400 237,700Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2018, she sells the following long-term assets used in her business: Sales Asset Price Cost Building $234,200 $204,200 Equipment 84,200 152,200 Accumulated Depreciation $56,200 27,200 Lily's taxable income before these transactions is $164,700. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)Chanda is employed in a local accounting company (ABC accounting) that specialises in providing tax return to individuals. On 1st April, 2020 ABC provided a car for Chanda to use both for business and private purposes. ABC Purchased the car on 1st January, 2020 for the amount of $28,000. During the year, repairs and maintenance costs amounted to $2,000. Chanda contributes $1,000 towards the cost. Required: Please calculate the fringe benefits taxable (FBT) amount for the car using the statutory method in this case for the FBT year 2020-2021.
- How much taxable income should each of the following taxpayers report? a. Kimo builds custom surfboards. During the current year, his total revenues are 90,000, and he incurs 30,000 in expenses. Included in the 30,000 is a 10,000 payment to Kimos five-year-old son for services as an assistant. b. Manu gives hula lessons at a local bar. During the current year, she receives 9,000 in salary and 8,000 in tips. In addition, she engages in illegal behavior, for which she receives 10,000.Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales $ 5,000 Depreciation on greenhouse 10,000 Fertilizer, soil, pots 1,500 What are the factors that the IRS will consider when evaluating whether the activity is a business or a hobby? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ If the activity is deemed to be a regular business, what is the amount of Lew's loss from the activity? $_____________ If the activity is deemed to be a hobby, what is the amount of Lew's expenses (if any) from the activity that may be deducted? $_____________