HOMEWORK FOR CHP 6 -2

HOMEWORK FOR CHP 6 -2 - Question # 42 A. The effect of the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Question # 42 A. The effect of the illegal gambling business on Trevors AGI is as follows : Gross income = $52,000 Deductible expenses: Salaries + payout to winners ( $ 8,000 + $29000) = ($37000) Increase in AGI = $15,000 the bribe to police of $7,500 is not deductible since this expense violates public policy. Trevor also must include the tip income of $16,000 in his gross income B. Trevors taxable income also increases by $15,000 C. For an illegal drug activity, all of the expenses are not allowed. Thats why; illegal drug operation would increase Trevors AGI by $52,000. However, the $6,200 cost of goods sold is a reduction in calculating gross income rather than as an expense. Therefore, the illegal drug operation increases Trevors AGI by $45,800 ($52,000 $6,200). QUESTION # 53 First of all I will calculate the rental income ; Rental income = $4,000 less-Taxes and interest (60/365 $5,856) = (963) REMINDER = $3,037 Less: Utilities and maintenance (1/2 $2,600)...
View Full Document

This note was uploaded on 03/07/2012 for the course BUS 603 taught by Professor Rosnin during the Spring '12 term at Rutgers.

Page1 / 3

HOMEWORK FOR CHP 6 -2 - Question # 42 A. The effect of the...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online