Chapter 5 Questions
(LO 2) Fred said in will his nephew John should serve as executor of Freds estate. John received
$10,000 for serving as executor. Can John exclude the $10,000 from his GI? The $10,000 that John
received is compensation for services
(LO 1) Mason performs services for Iz. Employee or Independent Contractor?
Performs services only for Iz and does not work for anyone else. Employee.
Reports his job-related expenses on a Schedule C. Independent contractor.
TAX FORMULA AND TAX DETERMINATION;
AN OVERVIEW OF PROPERTY TRANSACTIONS
SOLUTIONS TO PROBLEM MATERIALS
(LO 1) Inclusions in gross income include items b., c., f., g., h., and i. Item e. is a nontaxable return of capital.
Chapter 2 Exercise Solutions
Value Analysis Schedule
Company fair value .
Fair value of net assets excluding goodwill .
Gain on acquisition
To be determined
Chapter 4 Exercise Solutions
Source of income components:
Cost of goods sold .
Other income .
Consolidated net income.
Distributed to NCI.
Distributed to controlling interest .
Chapter 3 Exercise Solutions
(1) Determination and Distribution of Excess Schedule
Fair value of subsidiary .
Less book value of interest acquired:
Common stock ($10 par) .
Retained earnings .
Total equity .