word document into excel

Demetria Cox

ACC460: Taxation

Professor Derrick Doba

11/20/2016

Taxation Problems

Question #108

Part A

The determination of the taxable income for the year 2013 is calculated as follows:

S.no.	Particulars	Amount ($)
1	Jolene’s Salary	13,000
2	Interest Income	4,000
3	Dividend Income	2,500
4	Nick’s Pension	12,500
5	Farmer’s Fund Annuity	6,000
6	Rental Income ($ 18,000 - $ 22,000)	(4,000)
7	Social Security Benefits	7,000
8	Adjusted Gross Income	41,000
9	Itemized Deduction	12,350
10	Exemptions	7,800
11	Taxable Income	20,850
12	Tax Liability	2,239

Part B

The determination of whether amount of tax-exempt bonds provide a viable after-tax return is calculated as follows:

Particulars	Certificate of Deposit	Tax-Exempt Bonds
Amount	100,000	1,00,000
Interest Rate	4%	3%
Interest	4,000	3,000
Tax @ 10.74%	430	0
After-tax interest	3,570	3,000
Percentage return	3.57%	3.00%

From the above analysis, it shows that better returns are facilitated by the Certificate of Deposits (CD).

Part C

The determination of the best option for the use of CD, which has presented favorable returns as calculated above, it means that proceeds obtained from venture must be invested in it. The analysis of investment is determined as shown below:

S.no.	Particulars	Amount ($)
1	Jolene’s Salary	13,000
2	Interest Income (4,000 + (20,000 x 4%))	4,800
3	Dividend Income	1,000
4	Nick’s Pension	12,500
5	Farmer’s Fund Annuity	6,000
6	Rental Income ($ 18,000 - $ 22,000)	(4,000)
7	Social Security Benefits	7,000
8	Capital Gain on sale of shares (2,000 x ($ 20 - $ 10)	20,000
9	Adjusted Gross Income	60,300
10	Itemized Deduction	12,350
11	Exemptions	7,800
12	Taxable Income	40,150
13	Tax Liability	5,126

There is the need to determine the amount of tax returns under consideration for both options. Such an analysis is explained in the statement as shown below:

Particulars	Investment in Corb Company	Investment in CD
Dividend Income	1,500	-
Interest Income	-	800
Investment	20,000	20,000
Return %	7.50%	4.00%

From the above illustration, the best recommended is to avoid any transaction involving the sale of shares. It is appropriate to note that there have been the assumption that the benefits received from the social security are taxable (Shakin & Seibert, 2015). Also, the tax rate has been set at 10.74%. i.e

$2,239/$20,850= 10.74%

Question #86

Part A & B

Ms. Carmin Kovach

RE: Tax Return Relating to the year 2013

This is a reference to the subject of tax returns for the year 2013. For that purposes, there is the need to take note of the following assumptions made while preparing tax returns.

· The amount of salary represents full taxable components

· Available deductions amount to $4,800. These relate to alimony payments to Ray

· Any deductions made are availed for contribution towards the pension plan

· The amount of tuition fee which is deductible has been calculated as shown below:

Particulars	Amount ($)
Total Tuition Fees	2,300
Total Income	75,945
Less: Alimony Paid	(4,800)
	71,145
Deduction is available as the difference in not more than $ 80,000
Tuition and Fees Deduction (Since the amount is more than $ 65,000)	$ 2,000

· The employer bears fringe benefits tax (FBT)

· Any amount of money won as prizes must be included as taxable income

· The amount of social security benefits receivable from the deceased father will not make up part of the taxable income

· The amount of rental income is calculated as follows:

Particulars	Amount ($)
Total Rental Income ($ 400 x 5)	2,000
Less: Plumbing Costs	300
Deductible Costs	2,680
Depreciation	1,080
Rental Income	(2,060)

· Income received from bonds and stocks has been shown in the statement below:

Particulars	Amount ($)
General Dynamics Common Stock	300
City of Toronto Bonds	1,600
State of Nebraska Bonds	400
New Jersey Economic Development Bonds	300
Grubstake Mining Development Stock	1,000
Total	3,600

· The following illustration exemplifies the calculation of capital gain/(loss):

Security	Nebraska Bonds	Cassill Corporation Stock
Sale Date	03/14/13	10/18/13
Purchase Date	10/22/10	02/19/13
Type	Long-Term	Short-Term
Sale Price	$ 1,900	$ 8,900
Commission paid	$ 80	$ 450
Net Proceeds	$ 1820	$ 8,450
Basis	$ 1,710	$ 9,630
Capital Gain/ (loss)	$ 110	$ (1,180)

From the above illustration, it can be deduced that the amount of Net Capital Gain/(loss) is $(1,070).

· The amount of dividend income received equals 50x$3.50= $175

· The amount of compensation in the case/lieu of damages/injuries shall not be taxed

· The amount of payments relating to a case of disability is a taxable amount (Drumbl, 2016).

· Following the considerations for these calculations, the amount of adjusted gross income totals $69,145. Illustration is shown below:

S.no.	Particulars	Amount ($)
1	Annual Salary	80,000
2	Alimony paid	(4,800)
3	Allowable contribution	(6,400)
4	Prize Award ($ 5,000 / 10)	500
5	Rental Income	(2,060)
6	Income from stocks and bonds	3,600
7	Capital Gain / (Loss)	(1,070)
8	Dividend Income	175
9	Disability Payments	1,200
10	Less: Tuition Fees Deduction	(2,000)
11	Adjusted Gross Income	69,145

The above determined has been prepared in compliance with the relevant accounting and auditing standards.

Abc limited, (for Tax Consultant)

Question #73

Part A

The determination of net gain/loss is presented as shown below:

Particulars	Crane	Dump Truck
Amount Realized	$ 35,000	$ 42,000
Adjusted basis	$ 39,650	$ 33,880
Gain / (Loss) to be recognized	$ (4,650)	$ 8,120

Part B

The determination of the net gain/ (loss) is illustrated below:

Particulars	Amount
Amount Realized (FV of Bulldozer + Cash)	$ 72,000
Adjusted basis	$ 50,000
Gain / (Loss) realized	$ 22,000
Gain Recognized (Cash)	$ 12,000
Deferred Gain	$ 10,000

Part C

The determination of the amount of net gain/(loss) is illustrated below:

Particulars	Crane
Amount Realized	$ 2,30,000
Adjusted basis	$ 2,00,000
Gain / (Loss) realized	$ 30,000
Gain Recognized (Cash)	$ -
Deferred Gain	$ 30,000

Supply warehouse is calculated as $280,000-$30,000= $250,000

Part D

The determination of net gain/ (loss) is calculated as follows:

Particulars	Amount
Amount Realized	$ 195,000
Adjusted basis	$ 22,000
Gain / (Loss) realized	$ 173,000
Gain Recognized (Cash)	$ -
Deferred Gain	$ 173,000

Based on the office park, $350,000-$173,000= $177,000

Part E

The determination of the net gain/(loss) is shown as follows:

Particulars	Amount
Amount Realized	$ 10,000
Adjusted basis	$ 15,000
Gain / (Loss) realized	$ -5,000
Gain Recognized (Cash)	$ -
Deferred Gain	$ -5,000

Based on the automobile, it follows that; $55,000 – $(5,000)= $60,000

References

Drumbl, M. L. (2016). Beyond Polemics: Poverty, Taxes, and Noncompliance. Taxes, and Noncompliance (April 8, 2016). Source: https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Are-Short-Term-Disability-Claim-Payments-Considered-Earnings-/INF14176.html

Shakin, J., & Seibert, K. (2015). The Taxation of Social Security Benefits. Washington, DC: Congressional Budget Office. https://www. cbo. go v/publication/49948. Source: https://www.cbo.gov/publication/49948