The Coffee Company engages in the following transactions during the taxable year. Sells stock held for three years as an investment for $30,000 (adjusted basis of $20,000). Sells land used in the...

(a) Benson goes into bankruptcy. His estate is not sufficient to pay all taxes owed. Explain whether Bensons taxes are discharged by the proceedings. (b) Benson obtained property from Anderson on...

Mabel and Alan, who are in the 35% tax bracket, recently acquired a fast-food franchise. Both of them will work in the business and receive a salary of $175,000. They anticipate that the annual...

Bruce Albea Contracting, Inc., was the general contractor on a state highway project. Albea and the companies that agreed to guarantee the financial liabilities involved here (called sureties) agreed...

Discuss the impact of Merrick v. Taylor in regard to the 1989 state A statute.

Sparrow Corporation would like you to review its employee fringe benefits program with regard to the tax consequences of the plan for the company's president (Polly), who is also the majority...

Chanel, Inc. is a corporate entity duly organized under the laws of the state of New York, with its principal place of business in New York City. Chanel is engaged in the business of manufacturing...

In problem 89 in Chapter 9 and problem 74 in Chapter 10, the initial basis and the adjusted basis of Emelio and Charitas assets were determined as of December 31, 2011. During 2012, they have the...

In 2014, Bertha Jarow (head of household with three dependents) had a $28,000 loss from the sale of a personal residence. She also purchased from an individual inventor for $7,000 (and resold in two...

Did GFI have a legitimate reason to expect that Egan would accept the fourth shipment? Why or why not? GFI, Inc., a Hong Kong company, makes audio decoder chips, one of the essential components used...

Suppose that the sunken barge in United States v. Carroll Towing Co. and its cargo are worth $100,000. Assume that the probability that the barge would break loose if the bargee is not present equals...

Tobias is a 50% partner in Solomon LLC, which does not invest in real estate. On January 1, 2015, Tobias's adjusted basis for his LLC interest is $130,000, and his at-risk amount is $105,000. His...

Elijah is employed as a full-time high school teacher. The school district for which he works recently instituted a policy requiring all of its teachers to start working on a masters degree. Pursuant...

Purple Company has $200,000 in net income for 2015 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and has no dependents. She claims the $6,300...

What strategic path should Jim Harris choose? What are the major issues influencing your option?

Dr. Jake Lambert signed an employment agreement with Baptist Health Services, Inc., to provide cardiothoracic surgery services to Baptist Memorial Hospital-North Mississippi, Inc., in Oxford,...

Former Enron Chief Financial Officer Andrew Fastow, in his testimony against his former bosses at their criminal trial for fraud, said, I thought I was being a hero for Enron. At the time, I thought...

The Baton Rouge Crime Stoppers (BCS) offered a reward for information about the South Louisiana Serial Killer. The information was to be provided via a hot line. Dianne Alexander had survived an...

David Desgro hired Paul Pack to inspect a house that Desgro wanted to buy. Pack had Desgro sign a standard-form contract that included a twelve- month limit for claims based on the agreement. Pack...

Lucia has acquired one share of common stock of a multimillion-dollar corporation with more than 500,000 shareholders. Lucias ownership is so small that she is wondering what her rights are as a...

(a) Along a winding dirt road, Lee finds an old, rusty car with no license plates. Looking through the car, which is unlocked, he finds a valuable diamond ring. Later, the original buyer of the ring...

John Torniero was employed by Micheals Jewelers, Inc. (Micheals). During the course of his employment, Torniero stole pieces of jewelry, including several diamond rings, a sapphire ring, a gold...

Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2016,...

John Sasson and Emily Springer met in January 2002. John worked for the U.S. Army as an engineer. Emily was an attorney with a law firm. Six months later, John bought a townhouse in Randolph, New...

Wheeler operated an automobile service station, which he leased from W. C. Cornitius, Inc. The lease ran for three years. Although the lease did not contain any provision for renewal, it was in fact...

Fritz has an open fire insurance policy on his home for a maximum liability of $60,000. The policy has a number of standard clauses, including the right of the insurer to restore or rebuild the...

John and Susan Verba sold a Vermont lakeshore lot to Shane and Deborah Rancourt for $115,000. The Rancourts intended to build a house on the property, but after preparing the land for construction,...

Marya Callais, a citizen of Florida, was walking along a busy street in Tallahassee when a large crate flew off a passing truck and hit her, causing numerous injuries to Callais. She incurred a great...

Visit the IRSs bankruptcy site at www.irs.gov/compliance/enforcement /article/0,,id=117520,00.html and answer the following questions: a. What percentage of bankruptcy petitions does the IRS estimate...

Smith, Jones, and Brown were creditors of White, who operated a grain elevator known as Whites Elevator. Heavily in debt, White was about to fail when the three creditors agreed to take title to his...

Suppose that the Hyatts experienced trouble with the computers components after they had used the computer for two months. What factors will a court consider in deciding whether to enforce the forum...

In 2015, Gray Corporation, a calendar year C corporation, has a $75,000 charitable contribution carryover from a gift made in 2010. Gray is contemplating a gift of land to a qualified charity in...

At the advent of the social season, Aunt Lavinia purchased a hula skirt in Sadies dress shop. The salesclerk told her, This superior garment will do things for a person. Aunt Lavinias houseguest, her...

Use a 5 percent discount rate to compute the NPV of each of the following series of cash receipts and payments. a. $6,200 received now (year 0), $1,890 paid in year 3, and $4,000 paid in year 5. b....

Karen has filed a voluntary petition for a Chapter 7 proceeding. The total value of her estate is $35,000. Ben, who is owed $18,000, has a security interest in property valued at $12,000. Lauren has...

Who is the principal, and who is the agent in this scenario? By which method was an agency relationship formed between Scott and Blatt? James Blatt hired Marilyn Scott to sell insurance for the...

Mr. I. M. Bezzle works in the purchasing department for Big Time Inc. During the 12 years that he has worked there, he has been a trusted employee and has sole responsibility for the companys...

Answer the following two questions: 1. After being named as a defendant in a corporate fraud case, the XYZ accounting firm was found guilty of negligence and fined $25 billion. As a partner for the...

Blushing Brides, LLC, a publisher of wedding-planning magazines in Columbus, Ohio, opened an account with Gray Printing Co. in July 2000. On behalf of Blushing Brides, Louis Zacks, the firms...

Meuser Material & Equipment Company (Meuser) was a dealer in construction equipment. Meuser entered into an agreement with Joe McMillan for the sale of a bulldozer to McMillan. The agreement called...

(Multiple choice) 1. When detecting fraud, it is important that fraud investigators: a. Remain objective and neutral. b. Assume guilt. c. Assume innocence. d. None of the above. 2. Data-driven fraud...

Petra Valoma and her three roommates rented an apartment in New York City with a security deposit of $2,850, two months of rent for $5,700, and a property loss payment of $800. Less than a month...

At the time of her death on September 4, 2015, Alicia held the following assets. Alicia was also the life tenant of a trust (fair market value of $2 million) created by her late husband Bert. (The...

Carter was an employee of the Sheriff's office in Hampton, Virginia. When his boss, Sheriff Roberts, was up for reelection against Adams, Carter "liked" the Adams campaign's Facebook page. Upon...

Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111)....

Catania wished to paint the exterior of his house. He went to Brown, a local paint store owner, and asked him to recommend a paint for the job. Catania told Brown that the exterior walls were stucco...

A bookkeeper in a $3 million retail company had earned the trust of her supervisor, so various functions normally reserved for management were assigned to her, including the authority to issue and...

Citron enters into a "Type C" restructuring with Ecru. Ecru transfers $800,000 of its voting stock for Citron's $1.2 million assets (basis $600,000) and $400,000 liabilities. Citron retains one...

Legislative Acts: Section 359-23A of the state statutes provides that to be eligible to run for the state senate, an individual must have been a resident of the state for three years. Local ordinance...

Mr. and Mrs. L had the following income items: Dividend eligible for 0% preferential rate $ 3,400 Capital gain eligible for 0% preferential rate .. 2,900 Mrs. Ls salary .. 24,325 Mr. L is age 66, and...

Benjamin is a widower who has two married children, Edward and Patricia. Patricia has two children, Perry and Paul. Edward has no children. Benjamin dies, and his typewritten will leaves all of his...

Christopher Nadel was in the car with his father, Paul, and his grandmother, Evelyn, when they pulled into Burger King for breakfast. Christopher was seated in the center of the front seat, between...

Use Exhibit 16.1 to provide the required information for Warbler Corporation, whose Federal taxable income totals $10 million. Warbler apportions 70% of its manufacturing income to State C. Warbler...

John Blackwell was seriously injured in an auto accident. His wife was Korean and spoke little English and needed help communicating with Blackwell's doctor. The Blackwells hired Choi as an...

In March 2016, Serengeti exercised an ISO that had been granted by his employer, Thunder Corporation, in December 2013. Serengeti acquired 5,000 shares of Thunder stock with a strike price of $65 per...

Can Marta obtain rescission of the contract based on undue influence? If the sale to Janis had been completed before her death, could Janis have obtained rescission based on undue influence? Explain....

What approaches may APC take in order to invest in the restaurant, and what are the legal implications of each approach? APC, Inc., is a venture capital firm that invests in new businesses to help...

Paula, Fred, and Stephanie agree that Paula and Fred will form and conduct a partnership business and that Stephanie will become a partner in two years. Stephanie agrees to lend the firm $50,000 and...

JoyceClifford gave a check for $5,000 to her nephewCarl to help with living expenses for his last year of college. The face of the check stated, As a loan. Years later, Carl wrote to his aunt asking...

Kelsoe worked for International Wood Products, Inc., for a number of years. One day Hernandez, a director and major stockholder of the company, promised Kelsoe that the corporation would give her 5...

Ken purchased 10,000 shares of Gold Corporation common stock six years ago for $160,000. In the current year, Ken received a preferred stock dividend of 800 shares, while the other holders of common...

Rosalie owns 50% of the outstanding stock of Salmon Corporation. In a qualifying stock redemption, Salmon distributes $80,000 to Rosalie in exchange for one-half of her shares, which have a basis of...

Jesse Spires was employed as a welder by Johnson Welded Products, Inc. Johnson Welded Products provides a lunchroom equipped with a microwave, refrigerator, and vending machine for sandwiches,...

Mr. and Mrs. D had the following income items: Mr. Ds salary $52,500 Mrs. Ds Schedule C net profit 41,800 Interest income .. 1,300 Mrs. Ds self-employment tax was $5,906. The couple had $8,070...

Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not...

McDonalds Corp.s Happy Meal meal selection consists of an entre, a small order of French fries, a small drink, and a toy. In the early 1990s, McDonalds began to aim its Happy Meal marketing at...

The December 31, 2015, balance sheet of the GAB LLP reads as follows: Capital is not a material income-producing factor for the LLP. Gina is an active (general) partner and owner of a 25% interest in...

Janet buys a years membership in a new spa and exercise gym that has just opened. She pays $500 with her credit card. Less than one month later the business closes its doors, leaving 450 members...

Client's Facts: The client is charged with burglary. He broke a window, entered his neighbor's garage, and took three cases of beer. The garage is a separate building located about six feet from the...

Alpha orally appointed Omega as his agent to find and purchase for him a 1930 Dodge automobile in good condition, and Omega located such a car. Its owner, Roe, agreed to sell and deliver the car on...

On January 1, 2015, Kinney, Inc., an S corporation, reports $4,000 of accumulated E&P and a balance of $10,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of...

Bogart owed several debts to Security Bank & Trust Co. and applied to the bank for a loan to pay the debts. The banks employee stated that he would take the application for the loan to the loan...

For each of the following red flags, identify which fraud exposure the risk falls under: management and directors, relationships with others, organization and industry, or financial results and...

Rick and Debbie Siravo own a beachfront home in Wrightsville Beach, N.C. During the year, they rent it for 20 weeks (140 days) at $1,100 per week and use it 10 days for personal purposes. Rick...

Waldo Corporation has recently retained your accounting firm to prepare its income tax return. Art, the partner in charge of the engagement, has assigned you the job of reviewing last years return...

On April 17, 2010, Kenneth Laurion, the father of Dennis Laurion (Laurion), was admitted to St. Lukes Hospital in Duluth [Minnesota] after suffering a hemorrhagic stroke. On April 19, Kenneth Laurion...

Clint, your client, owns a life insurance policy on his own life. He has paid $6,800 in premiums, and the cash surrender value of the policy is $30,000. Clint borrowed $30,000 from the insurance...

Ackerley Media Group, Inc., claimed to have a three-season advertising Team Sponsorship Agreement (TSA) with Sharp Electronics Corporation to promote Sharp products at all Seattle Supersonics NBA...

Hope Corporation manufactures and sells climate-controlled wine cabinets. Its most popular model sells for $3,000 and comes with a basic 90-day war ranty. For an extra $150, this warranty is extended...

Falcon, Inc., owns a silver mine that it purchased several years ago for $925,000. The adjusted basis at the beginning of the year is $400,000. For the year, Falcon deducts depletion of $700,000...

Joan Longhurst, along with three of her best friends, started her own ranching operation in Hawaii. The business began with two bulls and 20 heifers. After their first year, the partners were turning...

On October 21 of the current year, David receives stock of Western Corporation as a gift from his grandfather, who acquired the stock on January 20, 1995. Under what conditions would Davids holding...

On May 10 of the current year, Stowe Corporation distributes to its shareholder Arlene $20,000 in cash and land (a capital asset) having a $50,000 FMV. The land has a $15,000 adjusted basis (for both...

A young girl found an attractive stone in the woods and sold it to a jeweler for $1. Later, her family discovered that the stone was a rough diamond worth $700. Her family asked the court to void the...

Marcella Lashmett was engaged in the business of farming in Illinois. Her daughter Christine Montgomery was also a farmer. Christine often borrowed Marcellas farm equipment. More than once, Christine...

At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $32,000. The corporation generates no additional E & P during the year. On December 31, the corporation...

The Phillies, L.P., the owner of the Philadelphia Phillies professional baseball team (Phillies), decided to build a new baseball stadium called Citizens Bank Park (the Project). The Phillies entered...

Four unrelated shareholders own Benton Corporations 400 shares of outstanding stock. As indicated below, Benton redeems a total of 100 shares for $500 per share from three of its shareholders. Each...

Johnny Sport is a world-famous athlete. He is careful to avoid using any performance enhancing drugs that are banned by his sports oversight organization. Is it ethical for Johnny to take a...

Scott Snapp contracted with Castle-brook Builders, Inc., which was owned by Stephen Kappeler, to remodel a house. Kappeler estimated that the remodeling would cost around $500,000. Eventually,...

Sayre learned that Adams, Boone, and Chase were planning to form a corporation for the purpose of manufacturing and marketing a line of novelties to wholesale outlets. Sayre had patented a...

Continue with the results of Problem 35. Prepare the GAAP journal entries for Brittons year 1 income tax expense. In problem Britton, Inc., an accrual basis C corporation, sells widgets on credit....

On June 1, 2015, Mario entered into a contract to sell real estate for $1 million (adjusted basis $200,000). The sale was conditioned on a rezoning of the property for commercial use. A $50,000...

Smith owned Blackacre in fee simple absolute. In section 3 of a properly executed will, Smith devised Blackacre as follows: I devise my farm Blackacre to my son Darwin so long as it is used as a...

Martha Christiansen owns womens apparel stores bearing her name in New Seabury, Massachusetts; Lake Placid, New York; Palm Beach, Florida; and Palm Springs, California. At a meeting with her four...

WhaleCo acquired all of the common stock of MinnowCo early in year 1 for $900,000, and MinnowCo immediately elected to join WhaleCos consolidated Federal income tax return. As part of the takeover,...

Todd and Elaine purchased for $300,000 a building that was used for manufacturing pianos. Then as promoters, they formed a new corporation and resold the building to the new corporation for $500,000...

Could the quarrys backhoe operator who punctured the pipeline also be charged with a crime in this situation? Explain. Edward Hanousek worked for Pacific & Arctic Railway and Navigation Company (P&A)...

Four friends plan to form a corporation for purposes of constructing a shopping center. Charlie will be contributing the land for the project and wants more security than shareholder status provides....

Anna is about to buy a house on a hill. Prior to the purchase she obtains a promise from Betty, the owner of the adjacent property, that Betty will not build any structure that would block Annas...