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Unformatted text preview: Home work BUSI604 Chapter#3 Date 02/05/12 Question #2 During the year, Lucy is involved in the following situations. What are possible Federal income tax effects of these transactions? Answer. Gambling money will be including in gross income. It is taxable under Federal income tax. Paid for terrific ticket is non deductable expense. It will not deduct form the taxable income. Expense on Mayor Reelection campaigns is not income producing activity. It does not link with trade or business. It is non deductable item form the taxable expense. Borrow money from bank is not income because it is obligation to pay back to bank. So, it will not add in income and taxed. Gain on personal property will include in taxable income. In contrast, loss on property is non deductable but only theft loss is allowed in excess of 10% of AGI. Funeral expense is non deductable because it is personal expense. It is taxable income....
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- Spring '12