Taxation - Individual-assignment

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Week 4 Assignment

Tax - Individual

Week 4 Assignment

Complete the following exercises from your textbook:


Chapter 13-

  • Computational Exercises 13, 14, 15, 18, and 21
  • Problems- 29 and 31

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increas Dreign income taxes from a financial perspective by Iset the expenses he will incur while living overseas. If 8. Issue ID Hapone de este Issue ID major tangible assets such as his personal automobile. Identify the relevant tax issues. Tim takes the assignment, he will likely rent his personal residence and sell several Mark and Lisa are approaching an exciting time in their lives as their oldest Austin's college education? some of the tax issues Mark and Lisa should consider as they think about paying for L0.5 Elaborate rules exist that require employers to prepay various types of Fed- to comply with the requirements. eral taxes. Summarize the major issues that an employer must resolve if it is 10. L0.5 Kathy, a sole proprietor, owns and operates a grocery store. Kathy's husband the husband and daughter be subject to FICA? Explain. and her 16-year-old daughter work in the business and are paid wages. Will 11. LO.6 Describe the exposure (i.e., wage base and tax rate) that a self-employed individual has to the self-employment tax for 2017. 12. LO.7 Describe the two additional Medicare taxes that are assessed on high-income taxpayers. Computatic 13. LO.2 Carlson's general business credit for the current year is $84,000. His net income tax is $190,000, tentative minimum tax is $175,000, and net regular tax liability is $185,000. He has no other Federal income tax credits. Determine Carlson's general business credit for the year. Arch Soeda Napire PART 4 Special Tax Computation Methods, Payment Procedures, and Tax Credits 8 originally had been placed in service in 1935. What is Emily's rehabilitation expenditures tax credit? 23 2. 14. LO.3 Emily spent $135,000 to rehabilitate a building (adjusted basis of $90.00) What would be your answer if the building was a historic structure? 15. LO.3 During 2017, Lincoln Company hires seven individuals who are certified be members of a qualifying targeted group. Each employee works in esssss of 600 hours and is paid wages of $7,500 during the year. Determine the amount , b. 2- 25 Lincoln's work opportunity credit. 16. LO.3 Dora incurs the following research expenditures. $60,000 In-house wages In-house supplies 5,000 Payment to ABC, Inc., for research 80,000 Determine the amount of qualified research expenditures. b. research activities credit. 20. a. Assuming that the base amount is $50,000, determine Dora's incremental 27 17. LO.4 Samuel and Annamaria are married, file a joint return, and have three qualifi- ing children. In 2017, they earn wages of $34,000 and no other income. Determine the amount of their earned income credit for 2017, 18. LO.4 In 2017, Henri, a U.S. citizen and calendar year taxpayer, reports $30,000 of income from France, which imposes a 10% income tax, and $50,000 from Italy, which imposes a 40% tax. In addition, Henri reports taxable income of $69,750 from within the United States. Henri is married filing a joint return, and he claims three dependency exemp tions. Henri's U.S. tax before the foreign tax credit is $28,915. Determine the amount of Henri's foreign tax credit. a. 19. LO.4 In late 2016, Randy and Rachel Erwin paid $7,000 in legal fees, adoption fees and other expenses directly related to the adoption of an infant son, Jameson, In 2017, the year in which the adoption becomes final, they pay an additional $8,000. Their AGI in 2017 is $135,000. Determine the amount of the Erwins' adoption tax credit in 2017, b. Instead assume that the Erwins' 2017 AGI is $210,000. Determine the amount of the Erwins' adoption tax credit in 2017. 20. LO.4 Santiago and Amy are married and file a joint tax return claiming their three children, ages 12, 14, and 18, as dependents. Their Agi is $140,000. Deter mine the amount of the couple's child tax credit. Sergio's child and dependent care credit. 21. LO.4 Ivanna, who has three children under age 13, worked full-time while her spouse, Sergio, was attending college for nine months during the year. Ivana earned $28,000 and incurred $9,100 of child care expenses. Determine Ivanna and Fecision Making 22. LO.4,8 Polly and her husband, Leo, file a joint return and expect to report AGI of $75,000 in 2017. Polly's employer offers a child and dependent care reim bursement plan that allows up to $5,000 of qualifying expenses to be reimbursed in exchange for a $5,000 reduction in the employee's salary. Because Polly and Leo have two minor children requiring child care that costs $5.800 each year, Polly is wondering if she should sign up for the program instead of taking advantage of the two alterna credit for child and dependent care expenses. Assuming that Polly and I en 28. LO.2 Adelyn has a tentative general business credit of $42,000 for the current year. Adelyn's net regular tax liability before the general business credit is general business credit for the year. $107,000, and her tentative minimum tax is $88,000. Compute Adelyn's allowable 29. LO.2 Oak Corporation has the following general business credit carryovers. 2013 2014 2015 2016 $ 5,000 15,000 6,000 19,000 $45,000 Total carryovers If the general business credit generated by activities during 2017 equals $36,000 and the total credit allowed during the current year is $60,000 (based on tax liability), what amounts of the current general business credit and carryovers are utilized against the 2017 income tax liability? What is the amount of unused credit carried forward to 2018? 30. LO.3, 8 In the current year, Paul Chaing (4522 Fargo Street, Geneva, IL 60134) Decis acquires a qualifying historic structure for $350,000 (excluding the cost of Com the land) and plans to substantially rehabilitate the structure. He is planning to spend either $320,000 or $380,000 on rehabilitation expenditures. Write a letter to Paul and a memo for the tax files explaining, for the two alterna- tive expenditures, (1) the computation that determines the rehabilitation expendi- tures tax credit available to Paul, (2) the impact of the credit on Paul's adjusted basis in the property, and (3) the cash-flow differences as a result of the tax consequences related to his expenditure choice. 31. LO.3 Green Corporation hires six individuals on January 4, 2017, all of whom qual- ify for the work opportunity credit. Three of these individuals receive wages of $8,500 during 2017, and each individual works more than 400 hours during the year. The other three individuals work 300 hours and receive wages of $5,000 during the year. Expiration Date: 05/01/2018 - Expiration Date: 05/01/2018 - 03% Agency 27th Avenue, Commercial Coverage Company AGENT ANNET 18401 MIAN COMM American PROPERTY Property Insurance Company КММ Wilshire Insurance Compar Arch Policy Soe AL A AUTO Special Tax Computation Methods, Payment Procedures, and Tax Credits a. Calculate the amount of Green's work opportunity credit for 2017. b. If Green pays total wages of $140,000 to its employees during the year, how much of this amount is deductible in 2017 assuming that the work opportunity credit is taken? Making 32. LO.3, 8 Tom, a calendar year taxpayer, informs you that during the year, he incurs expenditures of $40,000 that qualify for the incremental research activities credit. In addition, it is determined that his base amount for the year is $32,800. a. ons Determine Tom's incremental research activities credit for the year. b. Tom is in the 25% tax bracket. Determine which approach to the e research expenditures and the research activities credit (other than capitalization and subsequent amortization) would provide the greater tax benefit to Tom. 33. LO.3 Ahmed Zinna (16 Southside Drive, Charlotte, NC 28204), one of your clients, owns two retail establishments in downtown Charlotte and has come to you seeking advice concerning the tax consequences of complying with the Americans with Disabilities Act. He understands that he needs to install various features at his stores (e.g., ramps, doorways, and restrooms that are handicap-accessible) to make them more accessible to disabled individuals. He asks whether any tax credits will be available to help offset the cost of the necessary changes. He estimates the cost of the planned changes to his facilities as follows. Location Projected Cost Calvin Street Stowe Avenue $22,000 8,500 He reminds you that the Calvin Street store was constructed in 2004, while the Stowe Avenue store is in a building that was constructed in 1947. Ahmed operates location. Write a letter to Ahmed in which you summarize your conclusions con- cerning the tax consequences of his proposed capital imnou a. Thor 4. LO.4 Which of the following ind for 2017?
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