Problem 4-26(b)
Description
1)Gross income
2)For AGI
deductions
3)AGI
4)Standard deduct.
5)Itemized deducts.
6)Greater of 4 or 5
7) Personal and
dependency
exemptions
8)Taxable income
Income tax liability
Amount
Computation
Problem 4-27
Description
1)Tota

Chapter 7
Individual Income Tax Computation and Tax Credits
PROBLEM SOLUTIONS
49. [LO 1] Whitney received $75,000 of taxable income in 2012. All of the income was salary
from her employer. What is her income tax liability in each of the following alternat

Chapter 9
Property Acquisition and Cost Recovery
PROBLEM SOLUTIONS
39. [LO 1] Jose purchased a delivery van for his business through an online auction.
His winning bid for the van was $24,500. In addition, Jose incurred the following
expenses before using

Chapter 4
Individual Income Tax Overview
PROBLEM SOLUTIONS
26. [LO 1] Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy
has two qualifying dependent children who live with him. He qualifies to file as head of household

Chapter 10
Property Dispositions
PROBLEM SOLUTIONS
32. [LO 1] Rafael sold an asset to Jamal. What is Rafaels amount realized on the sale in each of
the following alternative scenarios?
a.
b.
c.
Rafael received $80,000 of cash and a vehicle worth $10,000.

Chapter 6
Individual Deductions
PROBLEM SOLUTIONS
34.
[LO 1] Clem is married and is a skilled carpenter. Clems wife, Wanda, works part-time as a
substitute grade school teacher. Determine the amount of Clems expenses that are deductible
for AGI this year

Chapter 02
Tax Compliance, the IRS, and Tax Authorities
PROBLEM SOLUTIONS
(43) [LO1] Ahmed does not have enough cash on hand to pay his taxes. He was excited to hear
that he can request an extension to file his tax return. Does this solve his problem? Wha

Chapter 01
An Introduction to Tax
PROBLEM SOLUTIONS
(34) [LO3] Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest
from an investment in City of Heflin bonds. Using the U.S. tax rate schedule, how much
federal tax will he owe

Problem 1032
Selling expenses
Amount realized
b.
Item Received
_
_
C .
Securities
Commission
Amount realized Problem 1033
_
Problem 10-34
_
_
Problem 10-35

Problem 9-39
Item
Purchase price
Shipping costs
Paint
Sales tax
Registration fee
Wash and detailing
Engine tune-up
Problem 9-41
a.
b.
Include in Basis?
Problem 9-42
Asset
Computer
Printer
Desk
File cabinet
Problem 9-43
Problem 9-44
Land:
Cabin:
Problem 9-

Problem 8-47
a.
b.
c.
d.
Problem 8-48
a.
b.
c.
d.
Problem 8-49
a.
b.
c.
d.
Problem 8-50
a.
b.
c.
d.
Problem 8-51
a.
b.
Problem 8-54 (amount deductible only)
a.
b.
c.
d.
Problem 8-55
a.
Description
1. Modified AGI*
2. Qualified domestic gross receipts
3. A

Problem 7-51
Taxable
Income
Joint
Tax
Penalty
Single
(Benefit
Taxes
)
Jasmine
Thomas
Couple
Problem 7-52(a)
(1)Taxable income
(2)Preferential income
(3)Taxed at ordinary rates (1) (2)
(4)Tax at ordinary rates
(5)Tax at preferential rates
Total tax (4) + (

Problem 6-34
a.
b.
c.
d.
Problem 6-35
a.
b.
c.
Problem 6-37
a.
b.
Problem 6-39
a.
b.
Description
1)Modified AGI
2)Interest paid $2,500
3)Phaseout %: [(1) 60K]/15K
Amount
4)Phaseout amount: (2) x (3)
Deductible interest: (2) (4)
c.
Description
1)Modified A

Problem 5-38
a.
b.
c.
Problem 5-42
a.
b.
c.
d.
Problem 5-45
a.
1) Refund:
2) Itemized deductions standard
deduction:
3) Lesser of (1) or (2)
b.
c.
1) Refund:
2) Itemized deductions standard
deduction:
3) Lesser of (1) or (2)
Problem 5-47
a.
b.
c.
d.
Probl

Problem 3-32
Option 1:
PV of tax savings =
After-tax cost =
Option 2:
PV of tax savings =
After-tax cost =
Problem 3-45
a.
b.
After-tax income =
c.
After-tax income =
d.
Savings to Tawana:
Cost to son:
Net savings:
Problem 3-46
Expected profits to corpora

Chapter 8
Problem Solutions
45.
[LO 1] Manny hired his brothers firm to provide accounting services to his business. During
the current year, Manny paid his brothers firm $82,000 for services even though other firms
were willing to provide the same servic

Chapter 5
SOLUTIONS MANUAL
38.
[LO 1] For the following independent cases, determine whether economic income is present
and, if so, whether it must be included in gross income (that is, is it realized and recognized
for tax purposes?).
a.
b.
Ben sold stoc

Chapter 03
Tax Planning Strategies and Related Limitations
PROBLEM SOLUTIONS
(29) [LO2 PLANNING] Yong recently paid his accountant $10,000 for elaborate tax planning
strategies that exploit the timing strategy. Assuming this is an election year and there