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Unie 3 Assignment federal Tax - involved in searching for...

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Amy Turner June 23, 2011 AC256-01 Unit 3 Unit 3 Assignment Problem 1:3-33 Larry's Art gallery has a couple tax issues to consider First, Larry is going to have considerable expenditures to locate and deliver these items - He needs to make sure he is documenting the correct tax basis of the purchased item. For instance, if he purchases an item for $1000 and his costs to procure this item = $500 and then he sold it for $2,000 - His profit would only be $500 in which he would pay taxes on. Next, Larry needs to keep track of any advance payments or deposits and make sure they are not being recorded as earned income. Until he delivers the item, this money should be kept separate for tax purposes. Lastly, the money that Larry refunds customers should be documented as well & kept separate so it does not appear as an expense. There may be expenses
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Unformatted text preview: involved in searching for an item, but the customer's deposit refund is not an expense. Problem 1:3-38 a. No. Recapture is necessary only if there is a reduction in alimony payments. As the transfer of the residence is not a cash payment, it does not qualify as alimony. b. The payment of $20,000 would be deductible by Fred and taxable to Tammy. c. No. Remarriage is an exception to the recapture provision. d. Her basis is $100,000 Problem 1:3-47 a. $750 of the social security is taxable b. $4,250 of the social security is taxable Problem 1:3-50 Salary included in AGI 25,000 Tax exempt interest not included Dividends included 2,700 60% pension included 2,400 Rental loss included -5,000 Half of social security included 1,200 Total AGI 26,300...
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