Homework_Set_2 - Tax 4001 Judd 2011/2012 Homework Set #2...

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Tax 4001 Judd 2011/2012 Homework Set #2 (Chapter 4) 1. On June 30 of the current year Steve, a cash basis taxpayer, gave James, his brother, a bond as a gift. Steve had owned this bond for several years. The bond had a face value of $25,000 and it pays $2,000 interest annually on December 31. James received the $2,000 interest check on December 31. How much interest income must (a) James and (b) Steve recognize in for tax purposes? 2. Dell Corp’s interest and gain on investments for the current year were as follows: -Interest on US Government Bonds $800 -Interest on Bland County School Bonds $1,000 -Interest on a Virginia income tax refund $100 -Gain on the sale of Bland County School bond $1,500 How much of the above is included in Dell’s Gross Income from tax purposes? 3. During the year, Jonathan sold the following assets: business auto for $1500 loss (not a capital asset), stock investment for a $4000 loss (bought 2 months ago), and pleasure boat for $500 loss. Presuming adequate income, how much of these losses may Jonathan deduct? 4. Polo Co. had $250,000 in operating income and $75,000 in operating expenses during the year. In addition, Polo had a $13,000 LTCG and a $17,500 STCL. What is Polo’s taxable income? 5.
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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 - Tax 4001 Judd 2011/2012 Homework Set #2...

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