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AC553 - Week 2 - AC553 Week 2 Assignment Yazan Herbawi...

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AC553 Week 2 Assignment Yazan Herbawi Chapter 4 Problem 25: Regardless of the period the payment covers, it is recognized as income by the taxpayer upon receipt. However, the security deposit would be excluded from income until Billy actually forfeits all or part of it when the tenant leaves. 5,000 + 4,000 = $9,000 rental income recognized Problem 32: Barbara will assume the ownership of the property without recognizing a gain. The basis for the house will be $400,000. Arnold will assume the liability, and the mortgage payments may be deductible under applicable law. Alimony payments made by Arnold may be deducted from his income; however, Barbara will have to recognize the payments as taxable income. Child support is neither taxable by Barbara nor deductible by Arnold. Problem 38: Salary 45,000 Interest 800 Dividends 500 Rental Income3,500 Itemized deductions (12,000) Exemptions (7,300) 3650*2 Taxable Income 30,500 Chapter 6 Problem 29: Loss on sale of stock by individual’s business: this is deductible since it is a business loss, i.e., a loss arising from profit-seeking activities. This loss is deductible for AGI.
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