ACCT 323 Federal Income Tax I

ACCT 323 Federal Income Tax I

Prof. McClain

Provide short answers to the following questions.   Your responses should be in the range of a half to a page in length.

1. Regarding as if kind exchanges under 1031, discuss which of the following qualifying property are. In each case, explain why or why not it is a qualifying property:
2. personal auto traded for a new auto

This is not a qualifying property because there is no exchange of loss or profit, the margin is stagnant

1. Stock exchanged for bonds

There is an exchange of stocks and bonds and as such, it is a qualifying property

1. Business equipment exchanged for business delivery truck

This is a qualifying property because there is an equipment exchange on going

1. Business manufacturing building exchanged for office building

This is a qualifying property since the office bulging were exchanged

1. Merchandise inventory exchanged for other merchandise inventory

There is no qualifying property since the two are at a flat rate each

2. State the time requirements for a 1031 exchange in terms of maximum time between giving up the property and receiving the property. Describe how intermediaries can be used as a middle man in 1031 exchanges.   What are the time rules for property being constructed?

1031 is termed as a major tax deferral opportunity. According to the 1031 exchange rule, there are several and therefore unlimited times that an individual may roll over to the exchange rates. In addition, there are a number of real estate interests, which are termed at “like-kind”. Intermediaries can be used as middlemen in during the like-land property exchange on the 1031 terms. The terms rules that are constructed are based on the ownership of different properties. If someone owns a property and another person wants to won it, the affirmation of persuading the party is dependent on several factors but most likely, the situation is unlike.

3. Which of the following are excluded from gross income and which are included in gross income? Explain your answers!
4. inheritance from a deceased parent-excluded from gross income since no income is accounted for tax wise.
5. inheritance from a deceased friend who is not related by blood-taxation gross will be required therefore outside gross income
6. Value of employee training provided by the employer, which training could also be used by the employee for other jobs for other employers-gross income is included since the money for training is taxed
7. Unanticipated gift of a free iPad received from the employer, in appreciation of the employee appearing on a local talk show and saying nice things about the company-inclusive of the taxation fee, therefore gross income included
8. Unanticipated gift of a free iPad received from the employer, in appreciation of the employee checking in on the boss’s home while the boss was away on a 3-week vacation-gross income inclusive because of the taxation of the iPad
9. Which of the following are excluded from Bill’s gross income this year, and which are included in this year’s gross income? Explain your answers!
10. Bill earns $2,000 from Frank helping Frank research a book. Bill’s son Johnnyis in college ad needs to pay for it.   After the $2,000 is earned, Bill asks Frank to pay the money to Johnny instead of to him.-no gross included because there is no taxation
11. Bill earns $2,000 from Frank helping Frank research a book.   Bill’s son Johnny is in college ad needs to pay for it.   Before he did the work and earned the money, Bill asks Frank to pay the money after it is earned, to Johnny instead of to him-there is taxation included because of the college fees that was paid directly
12. Bill has been making a very large commission income this year and expects to be in the top tax bracket. He expects to make a much lower income next year and to be in a lower tax bracket next year.    On October 1^st, he asks his employer to hang onto any more income he earns that year and to pay it to him in January.

5. What are the allowable tax accounting method(s) for the following taxpayers?
6. Husband and wife file separately. Wife uses accrual method.  What can the husband use? Cash method
7. C corporation with assets of $60 million and $30 million annual sales –mitigate uncertain tax levels
8. Estate of a deceased taxpayer-interest rates-taxation is included and therefore the gross income too
9. John Smith who operates a grocery store as a proprietorship (Schedule C) business-taxation for the licensing of the store, therefore, it is inclusive of the gross income
10. John Smith who is just an employee receiving a W-2, but who has been using the accrual method for the last 5 years-cash flow-the accrual method exempts the gross income tax.