Homework2w

2W. Please submit your answers to the following questions and problems in a Word document. You should include a cover page and a references page for this assignment. Your qualitative answers should be written in full sentences with depth to your responses when needed. For questions and problems requiring computations, you need to share your supporting calculations.

These questions and problems are located in your 2021 CCH Federal Taxation Comprehensive Topics textbook by Smith, Harmelink, and Hasselback.

1) Problem 32 on page 4-32

2) Problem 51 on page 4-34

3) Question 14 on page 5-29

4) Problem 41 on page 5-32

5) Problem 25 on page 6-46

· Problem 32 on page 4-32

For each independent situation, determine the amount, if any that is includible in the gross income of the employee.

The employee of a motel has the choice of free lodging on the premises (fair market value $400 per week) or extra cash compensation. He is not required to live on premises. He chooses the lodging.

An employee arranges to have his annual bonus, $1,000, paid directly to his son. His objective is to make a wedding gift to the son.

An employee earns a salary of $500 per week. Pursuant to a court order, $100 of his salary goes to his ex-wife for child support.

· Problem 51 on page 4-34

Which of the following is not considered “constructive receipt” income in 2020?

1. Andrew Mason was informed that his check for services rendered was available on December 15, 2020, but he waited until January 16, 2021, to pick up the check.

2. A payment on a sale of real property placed in escrow on December 16, 2020, but not received by Benjamin Miles until January 12, 2021, when the transaction was closed.

3. Earned income of Candice Cord was received by her agent on December 30, 2020, but was not received by her until January 5, 2021.

4. Daniel Dryer received a check on December 30, 2020, for services rendered, but was unable to make a deposit until January 5, 2021.

5. Ellen Elks received stock on December 30, 2020, for services rendered, but was unable to find a buyer for the stock until January 20, 2021.

· Question 14 on page 5-29

Indicate whether the following income sources must be included or may be excluded from gross income:

1. Insurance proceeds for loss of finger

2. Prizes

3. Embezzlement proceeds

4. Interest on all savings deposits

5. Child support

6. Interest on Series HH bonds

7. Receipt of alimony by divorced husband - divorce agreement executed in 2018

8. Income produced from property acquired by gift

9. Gifts and inheritances

10. Scholarship grants for tuition

11. Compensation for injuries or sickness

12. Interest income on bonds issued by State of Ohio

13. Life insurance proceeds from a group plan

· Problem 41 on page 5-32

On May 1, 2020, Anthony was in an automobile accident while on his way to work. Following doctor’s advice, Anthony stayed home for six months to recover from his injuries. While at home, Anthony filed a lawsuit against the other driver. On December 1, 2020, the lawsuit was settled and Anthony received the following amounts:

Compensation for lost wages: $30,000

Personal injury damages (none of which was for punitive damages): 50,000

How much of the settlement must Anthony include in ordinary income on his 2020 tax return?              

· Problem 25 on page 6-46

Indicate whether the following expenditures are trade or business deductions (T), production of income deductions (PI), personal deductions (P), or are not deductible (X). Also indicate if the deductible expenditures are deductible “for” or “from” AGI.

1. Interest expense on business loan

2. Expenses incurred in an activity lacking a true profit motive (i.e., a hobby activity)

3. Commuting expenses of individual taxpayer

4. Rent payments paid by an illegal gambling business

5. Payment by a business to bribe a government official