26
Family Tax Planning
Solutions to Tax Research Problems
TAX RESEARCH PROBLEMS
16-42 This trust may be considered a grantor trust under 677(b), which provides that
"income of a trust shall not be considered taxable to the grantor merely because
such inco
23
S Corporations
Solutions to Tax Research Problems
TAX RESEARCH PROBLEMS
11-56 When Micros becomes a wholly owned subsidiary of L Inc., there will be a choice
of the tax structure. Micros will not be an S corporation in its own right, since L
Inc. is no
22
Taxation of Partnerships and Partners
Test Bank
True or False
_ 1.
Owners of investment property can elect that Subchapter K not apply to
their ventures if each owner retains a separate and undivided ownership
interest in the acquisition, operation, an
20
Corporate Distributions, Redemptions, and Liquidations
Test Bank
True or False
_ 1.
A corporation's accumulated E&P will equal its retained earnings.
_ 2.
It is possible for a corporation to pay a taxable dividend even though
there is a deficit in accu
19
Taxation of Business Forms and Their Owners
Solutions to Tax Research Problems
19-25 Family partnerships are attractive because of both tax and non-tax incentives.
However, the Tax Reform Act of 1986 reduced the tax benefits associated with
family part
18
Employee Compensation and Retirement Plans
Solutions to Tax Research Problems
18-36 There are several ways to approach this problem. Here is one: What is the present
value at the beginning of Year 11 (beginning of retirement) of each option
assuming th
17
Property Transactions: Dispositions of Trade or Business Property
Solutions to Tax Research Problems
17-58 The research question is: decide whether the fact that the grandmother used the
residence for personal purposes is relevant in determining the ch
16
Property Transactions: Capital Gains and Losses
Solutions to Tax Research Problems
16-57 The controlling question is whether a geographical limitation on the exploitation
of a patent is a substantial right. According to the cases cited, it is. Therefor
14
Property Transactions: Basis Determination and Recognition of Gain or Loss
Solutions to Tax Research Problems
14-39 1. In the first situation, H is able to find a buyer who will pay $1,000 for the
building. Upon this transfer, H has gain as follows:
Am
15
Nontaxable Exchanges
Solutions to Tax Research Problems
15-50 Regulation 1.1031(j)-l deals with exchanges of multiple properties. Under this
regulation, assets must be broken down into exchange groups. An exchange group
is made up of assets of like-kin
12
Deductions for Certain Investment Expenses and Losses
Test Bank
True or False
_ 1.
The form of organization usually used for traditional tax shelters is a C
corporation.
_ 2.
The acceleration of expenses to early periods and the postponement of
income
11
Itemized Deductions
Solutions to Tax Research Problems
11-41 Shirley should be able to deduct some, if not all of the interest that she pays to
Sam in each of the next 10 years. In John L. Seymour, 109 T.C. 279 (1997) the
Tax Court determined that inte
10
Certain Business Deductions and Losses
Solutions to Tax Research Problems
10-30 Section 165(a) provides the general rule for losses, stating, "there shall be allowed
as a deduction any loss sustained during the taxable year and not compensated for
by i
6
Gross Income: Inclusions and Exclusions
Solutions to Tax Research Problems
6-60
a. In a divorce, the custodial parent generally is allowed the exemption. Section
152(e), as revised by the Deficit Reduction Act of 1984 (DRA), simplified the
rules concern
9
Capital Recovery: Depreciation Amortization and Depletion
Solutions to Cumulative Problems
9-43
Below are the calculations to compute the taxable income of David and Lauren
Hammack.
Note: This return is completed for 2011. For this purpose, the special
8
Employee Business Expenses
Solutions to Cumulative Problems
8.40
The solution to 8-40 is on the following pages.
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7
Overview of Deductions and Losses
Solutions to Cumulative Problems
Solutions to 7-60 through 7-61 are found on the following pages.
Cumulative Problem 7-60
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7-61
The steps for determ
5
Gross Income
Solutions to Tax Return Problems
5-52
The treatment of the various items is discussed below.
1.
David's salary of $70,000 is taxable and is reported on line 7 of Form 1040.
The withholding is treated as a credit against the taxes owed and i
4
Personal and Dependency Exemptions; Filing Status; Determination of Tax for an
Individual; Filing Requirements
Solutions to Tax Return Problems
The solution to problem 4-53 is on page 4-2; the solution to problem 4-54 is on pages 4-3
through 4-6; the so
13
The Alternative Minimum Tax and Tax Credits
Solutions to Tax Research Problems
13-51 According to Ltr. Rul. 8349023 (8-31-83), the answer is yes, P will be allowed to
take the credit on her return in the year she places the office building into service
3
Taxable Entities; Tax Formula; Introduction to Property Transactions
Solutions to Tax Research Problems
3-56
The purpose for this problem is to allow one to gain an appreciation for the
organization of the Internal Revenue Code and the differing authori
2
Tax Practice and Research
Solutions to Tax Research Problems
2-23
a. CA-7. This information is shown in the citation for the case.
b. No. There is no Supreme Court citation listed.
c. Tax Court and reported as a memorandum decision, as shown in the cita
1
An Overview of Federal Taxation
Test Bank
True or False
_ 1.
A correlation exists between the amount of Federal tax an individual
pays and the value of benefits an individual receives.
_ 2.
The Thirteenth Amendment enacted in 1916 made it clear that Con
25
Income Taxation of Estates and Trusts
Solutions to Tax Research Problems
TAX RESEARCH PROBLEMS
15-33 Reg. 1.643(a)-3(a) provides the general rule that capital gains realized upon the
sale of fiduciary assets are normally allocated to corpus and excluda
Problem 30:
a) Because the check was available on
December 31, R is treated as having
constructively received it as of December 31
and must recognize the income that year.
b) Although the coupons were not cashed
until January 7, the taxpayer is treated a
Problem 1-17:
The tax savings resulting from deducting the $1,000 in 2012 is
(1,000*.25) = $250. The savings from deducting the same amount in
2013 is (1,000*.15) = $150. Deducting the $1,000 in 2012 would make
more financial sense equals to (250-150) = $
Problem 1:21
a.
b.
c.
Average tax rate equals tax expense divided by taxable income
( income subject to tax only). Accordingly, tax exempt income does
not change average tax rate.
Marginal tax rate is the rate at which the next dollar (of the amount
of in
Problem 1:18
Multiply each spread by the tax rate for the
spread and get an accumulated total:
8,700*10%
= 870
26,650*15%
4,867.50
= 3,997.5
50,300*25%
17,442.5
= 12,575
93,000*28%
43,482.5
= 26,040
870
3-31
a)
Income is taxable to partners based on partnership agreement
and regardless of how much was distributed: W =
(60%*12,000 = 7,200) and P = 4,800.
3-39
Gross income =
57,200
Deductions =
<1,200>
AGI =
Less the greater of itemized deductions of SD
56