Homework Set 2 Solution - Tax 4001 2011/2012 Homework Set#2...

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Tax 4001 2011/2012 Homework Set #2 Solution PAGE 1 #1 Since Steve owned the bond for half the year, he must recognize $1,000 of the interest income and James recognizes the other $1,000. The $1,000 that Steve recognizes is then considered a gift to James. #2 U.S. Bonds $800.00 Int. on Bland Schools $- Muni Bonds Virginia $100.00 Gain on Bland Bonds $1,500.00 $2,400.00 #3 Business Auto $1,500.00 ordinary loss Stock Investment $3,000.00 capital loss - he also has a $1,000 STCL carryforward Pleasure Boat - losses on personal use assets are not deductible #4 OI $250,000.00 EXP. $(75,000.00) LTCG $13,000.00 STCL $(13,000.00) $175,000.00 #5 Cash Basis $250,000.00 the amount collected this yearis included in gross income. The deposit is not income because there is an obligation to repay. Accrual Last Year's Sales Collected $35,000.00 already recognized as income in last year End AR $85,000.00 included in income in this year $300,000.00 The $45,000 bad debt will be a deduction next for the accrual basis taxpayer. It will have no effect on the cash-basis taxpayers current year income. Note: can only take as much as capital gains, Excess - 3 c/b, + 5 c/o
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Tax 4001 20112/2012 Homework Set #2 Solution PAGE 2 #6 a) The proceeds of $50,000 were paid to the beneficiary as the result of the death and are excludable from the GI of Monty's wife b) The proceeds are paid to the beneficiary upon the death of the insured. Therefore, they can exclude the proceeds. Similarly, the premiums are not deductible. #7
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This note was uploaded on 09/16/2011 for the course TAX 4001 taught by Professor Hampton,m during the Fall '08 term at University of Central Florida.

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Homework Set 2 Solution - Tax 4001 2011/2012 Homework Set#2...

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