Tax Ch 3 Ses2(2010)

Tax Ch 3 Ses2(2010) - Income Tax Ch. 3 Sections 3.3 3.10...

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Income Tax – Ch. 3 Sections 3.3 – 3.10
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Bad Debts Business Bad Debts Schedule C Fully deductible when written off Non-Business Bad Debts Schedule D Short-term Capital Loss $3,000 per year against ordinary income Self-Study 3.3 (page 3-10)
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Beginning Inventory $10,000 Add: Net Purchases 85,000 Cost of Goods Available for Sale $95,000 Less: Ending Inventory 12,000 Cost of Goods Sold $83,000
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Inventory Methods Assumed flow of inventory costs FIFO – first-in-first-out LIFO – last-in-first-out Average (not in book, but ok tax method)
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Inventory Example Jan 1 Beg. Inv. 200 units @ $50 Apr 4 Purchased 800 units @ $52 Aug 2 Purchased 600 units @ $55 Nov 1 Purchased 500 units @ $60 Dec 31 Inventory count 320 units
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Inventory Example, continued FIFO Expensed in order purchased Latest purchases left Ending Inventory = $19,200 320 units @ $60 LIFO Latest purchases expensed first Oldest units in inventory Ending Inventory = $16,240 200 units @ $50 $10,000 +120 units @ $52 6,240 $16,240
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Cost of Goods Sold Back of Schedule C (see page 3-13) Line 33 Method – Fifo, Lifo, Average = Cost Line 34 – Usually NO (must have IRS approval to change methods) Lines 37, 38, 39 used only if manufacturer (materials, labor, overhead) Self-Study 3.4 (page 3-12)
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NOL Net Operating Loss
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This note was uploaded on 02/02/2010 for the course ACCT 1B taught by Professor Bobd during the Spring '09 term at Las Positas College.

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Tax Ch 3 Ses2(2010) - Income Tax Ch. 3 Sections 3.3 3.10...

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