Schroeder parked his car in a parking lot operated by Allright, Inc. On the parking stub given him was printed in large, heavy type that the lot closed at 6:00 P.M. Under this information, printed in...

Kuznicki made a contract for the installation of a fire detection system by Security Safety Corp. for $498. The contract was made one night and canceled at 9:00 the next morning. Security then...

Ramon and Sophie are the sole shareholders of Gull Corporation. Ramon and Sophie each have a basis of $100,000 in their 2,000 shares of Gull common stock. When its E & P was $700,000, Gull...

Can Marta avoid the contract on the ground that both parties made a mistake about the condition of the house? Explain. Chelene had been a caregiver for Martas eighty-year-old mother, Janis, for nine...

Moon, a farmer, needs to install a two-thousand-pound piece of equipment in his barn. This will require lifting the equipment thirty feet up into a hayloft. Moon goes to Davidson Hardware and tells...

Ms. GW, an unmarried taxpayer, had the following income items: Salary ..$33,400 Net income from a rental house .. 3,200 Ms. GW has a four-year-old son, who attends a day care center while she is at...

Kristine bought a Rocky Mountain Chocolate Factory franchise. Her franchise agreement required her to purchase a cash register that cost $3,000, with an annual maintenance fee of $773. The agreement...

a. Are items of income not listed in Sec. 61 taxable? Explain. b. Because there is no specific exclusion for unrealized income, why is it not taxable? c. Can income be realized even when a...

A white college receptionist is fired when it is found that she told a black college applicant that the applications for admissions are distinguished by race by the notation of a small RH in the...

Saber Energy, Inc. (Saber), entered into a sales contract with Tri- State Petroleum Corporation (Tri- State). The contract called for Saber to sell Tri- State 110,000 barrels of gasoline per month...

Sabrina Runyan writes the following note on a sheet of paper: I, the undersigned, do hereby acknowledge that I owe Leo Woo one thousand dollars, with interest, payable out of the proceeds of the sale...

Was there an acceptance of the offer? Why or why not? Shane Durbin wanted to have a recording studio custom-built in his home. He sent invitations to a number of local contractors to submit bids on...

Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $15,000. The income is credited to its earnings and profits...

Bernie and Phils Great American Surplus store placed an ad in the Sunday Times stating, Next Saturday at 8:00 A.M. sharp, 3 brand new mink coats worth $5,000 each will be sold for $500 each! First...

Zogarts manufactured and sold a practice device for beginning golfers. According to statements on the package, the device was completely safe, and a player could never be struck by the devices golf...

When Johnson Hardware Shop borrowed $20,000 from First Bank, it used its inventory as collateral for the loan. First Bank perfected its security interest by filing a financing statement. The...

Rita Peatie filed a suit in a Connecticut state court in October 2004 against Wal-Mart Stores, Inc., to recover for injuries to her head, neck, and shoulder. Peatie claimed that she had been struck...

Tammy and Barry formed Pheasant Corporation several years ago in a transaction that qualified under 351. Both shareholders serve as officers and on the board of directors of Pheasant. In the current...

On June 1, 2015 Elisha and Ezra (who are equal partners) contribute property to form the Double E Partnership. Elisha contributes cash of $200,000. Ezra contributes a building and land with an...

A Barberton Glass Co. truck was transporting large sheets of glass down the highway. Elliot Schultz was driving his automobile some distance behind the truck. Because of the negligent way that the...

Assume that Arthur Rabe is suing Xavier Sanchez for breaching a contract in which Sanchez promised to sell Rabe a Van Gogh painting for $3 million. (a) In this lawsuit, who is the plaintiff and who...

One night, Kolcheks six-year-old daughter, Litisha, was in the spa with her mother. Litishas hair became entangled in the spas drain and she was sucked down and held underwater for a prolonged...

Willingham, Inc., an accrual basis C corporation, reports pretax book income of $1.6 million. At the beginning of the tax year, Willingham reported no deferred tax accounts on its balance sheet. It...

New Yorks banking law provides that a presumption arises that a joint tenancy has been created when a bank account is opened in the names of two persons payable to either or the survivor. While he...

A made a contract to construct a house for B. Subsequently, B sued A for breach of contract. A raised the defense that the contract was not binding because it was not sealed. Is this a valid defense?...

In January 2014, Wanda transferred machinery worth $200,000 (adjusted basis of $30,000) to a controlled corporation, Oriole, Inc. The transfer qualified under 351. Wanda had deducted $165,000 of...

Lucia, a single taxpayer, operates a florist business. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her...

Suppose that the attorney the Metzgars hired agreed to represent them on a contingency-fee basis. What does that mean? Ronald Metzgar placed his fifteen-month-old son, Matthew, awake and healthy, in...

Sixteen-year-old Travis Mitchell brought his Pontiac GTO into M&M Precision Body and Paint for body work and a paint job. M&M did the work and charged $1,900, which Travis paid. When Travis later...

Stan rented an office building to Clay for $3,000 per month. On December 29, 2014, Stan received a deposit of $4,000 in addition to the first and last months rent. Occupancy began on January 2, 2015....

A check drawn by Cullen for $500 is made payable to the order of Jordan and issued to Jordan. Jordan owes his landlord $500 in rent and transfers the check to his landlord with the following...

Pennsylvania contracted with Envirotest Systems, Inc., an Arizona company, to build 86 automobile emissions inspection stations in 25 counties and operate them for seven years. This contract is worth...

Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholder's basis in the Sunset stock is $50,000. a. Determine the tax consequences to the...

Alan Dershowitz, a law professor famous for his wealthy clients (O. J. Simpson, among others), joined with other lawyers to open a kosher delicatessen, Mavens Court. Dershowitz met with greater...

Lee, Brad, and Rick form the LBR Partnership on January 1 of the current year. In return for a 25% interest, Lee transfers property (basis of $15,000, fair market value of $17,500) subject to a...

Heather Reasonover opted to try Internet service from Clearwire Corp. Clearwire sent her a confirmation e- mail that included a link to its Web site. Clearwire also sent her a modem. In the enclosed...

Lee contracts to paint Sallys two-story house for $2,500. Sally realizes that she will not have sufficient money, so she transfers her rights under this agreement to her neighbor Karen, who has a...

During the year, Fred makes the following transfers: $1,000 to his mayors reelection campaign. $21,000 to his aunt, Ava, to reimburse her for what she paid the hospital for her gallbladder operation....

State Senator Bowdler convinced the legislature of State Z to pass a law requiring all professors to submit their class notes and transparencies to a board of censors to be sure that no lewd...

Kravitz owned 100 percent of the stock of American Health Programs, Inc. (AHP). To obtain the Philadelphia Fraternal Order of Police as a customer for AHP, Kravitz paid money bribes to persons who he...

Anthony was employed as a forklift operator for Blackburn Construction Company. While on the job, Anthony operated the forklift in a careless manner and in direct violation of Blackburns procedure...

Blubaugh was a district manager of Schlumberger Well Services. Turner was an executive employee of Schlumberger. Blubaugh was told that he would be fired unless he chose to resign. He was also told...

The following information for 2014 relates to Sparrow Corporation, a calendar year, accrual method taxpayer. Net income per books (after-tax) ........ $174,100 Federal income tax per...

Jiri Klimecek was a member of a group that overrode copyright protection in movies, video games, and software and then made them available for download online. Klimecek bought and installed hardware...

1. Would Lyles claim of racial discrimination be for intentional (disparate-treatment) or unintentional (disparate-impact) discrimination? Explain. 2. Can Lyle establish a prima facie case of racial...

CyberConnect, Inc., is an Internet service provider (ISP). Pepper is a CyberConnect subscriber. Market Reach, Inc., is an online advertising company. Using sophisticated software, Market Reach...

Bernard Flinn operated a business known as Harvey Investment Co., Inc./High Risk Loans. Flinn worked as a loan broker, matching those who came to him with lenders willing to loan them money given...

Dan and Patricia form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000)...

Following the events of September 11, 2001, in which four airplanes crashed as a result of the presence of terrorists on those flights, the FAA concluded that it needed to implement new procedures...

When the patent expired on a drug named Librium (a sedative that was the forerunner of Valium), its price dropped from $15 to $1.10.8 Explain why this drop in price occurred. Relate your explanation...

In December each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 28% marginal tax bracket, is considering the following...

Nina owns a used car lot. She signs and sends a fax to Seth, a used car wholesaler who has a huge lot of cars in the same city. The fax says, Confirming our agreementI pick any 15 cars for year...

Aqua Corporation purchases nonresidential real property on May 9, 2012, for $1 million. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 30, 2015,...

International Business Machines Corp. (IBM) hired Niels Jensen in 2000 as a software sales representative. In 2001, IBM presented a new Software Sales Incentive Plan (SIP) at a conference for its...

Finch, Inc., purchases 1,000 shares of Bluebird Corporation stock on October 3, 2014, for $300,000. On December 12, 2014, Finch purchases an additional 750 shares of Bluebird stock for $210,000....

George Castro told Ambrosio Medrano that a bribe to a certain corrupt Los Angeles County official would buy a contract with the county hospitals. To share in the deal, Medrano recruited Gustavo...

Aquamarine Corporation, a calendar year C corporation, makes the following donations to qualified charitable organizations during the current year: Determine the amount of Aquamarine Corporations...

Now suppose that the U.S. court hears the case and awards damages to Robco, but the government of Honduras has no assets in the United States that can be used to satisfy the judgment. Under which...

Mona and Denise, mother and daughter, operate a local restaurant as an LLC. The MD LLC earned a profit of $200,000 in the current year. Denise's equal LLC interest was acquired by gift from Mona....

Peter Sutton owned a home that was subject to two mortgages, but his only source of income was a $1,080 monthly Social Security benefit. In an effort to reduce his mortgage payments, which exceeded...

Fred Sanguine is a New York City produce broker. Ned Santini is a 19-year-old college student who works for Sanguine from 4:00 A.M. until 7:00 A.M. each weekday before he attends classes at Pace...

A passenger on a cruise ship was injured by a rope thrown while the ship was docking. The passenger was sitting on a lounge chair on the third deck when she was struck by the weighted end of a rope...

Stephans Machine & Tool, Inc., purchased a boring mill from D&H Machinery Consultants. The mill was a specialized type of equipment and was essential to the operation of Stephans plant. The purchase...

Helen Weeks has worked for Bonne Consulting Group (BCG) as the executive secretary in the administrative department for nearly 10 years. Her apparent integrity and dedication to her work has quickly...

Goose Corporation, a C corporation, incurs a net capital loss of $12,000 for 2015. It also has ordinary income of $10,000 in 2015. Goose had net capital gains of $2,500 in 2011 and $5,000 in 2014. a....

Raymond P. Wirth signed a pledge agreement that stated that in consideration of his interest in education, and intending to be legally bound, he irrevocably pledged and promised to pay Drexel...

Helen obtained an insurance policy insuring her life and naming her niece Julie as beneficiary. Helen died, and about a year later the policy was found in her house. When Julie claimed the insurance...

Ned Naive operated several franchised stores, and at the home offices suggestion, he consolidated its payroll and accounting functions with Andy the Accountant. Andy is not a CPA. Last year, Andy...

Customers of a chat room are using the chat room, Maphia, for access to each other and to transfer Sega games to each other. They are able to avoid paying the $19 to $60 the games cost for purchase...

Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percent marginal tax rate. Both companies perform engineering services. Company G is...

The AM/PM Franchise association was a group of 150 owners of ARCO Mini-Market franchises in Pennsylvania and New York. Each owner had an agreement to operate a gas station and mini-market, obtaining...

When Hurricane Katrina hit the Gulf Coast in 2005, Evangel Temple Assembly of God in Wichita Falls, Texas, contacted Wood Care Centers, Inc., about leasing a facility it owned to house evacuees from...

Coco Investments, LLC, and other investors participated in a condominium conversion project to be managed by Zamir Manager River Terrace, LLC. The participants entered into a new LLC agreement for...

William H. Bailey, MD, executed a note payable to California Dreamstreet, a joint venture that solicited investments for a cattle breeding operation. Baileys promissory note read, Dr. William H....

Under what theory might the court in this case make an exception to the limited liability of shareholders and hold Sharp personally liable for the damages? What factors would be relevant to the...

Alice Meyers, Monroe Moylan, and Bart Means practice medicine as Bay Area Anesthetics Associates (BAAA), a limited liability partnership. A newly certified nurse anesthesiologist, Mary Noyes, working...

At the end of last year, June, a 30% partner in the four-person BJJM Partnership, had an outside basis of $75,000 in the partnership, including a $60,000 share of partnership debt. Junes share of the...

Jaspal has a serious heart attack and is taken to the hospital. He is aware that he is not expected to live. Because he is a bachelor with no close relatives nearby, Jaspal gives his car keys to his...

Access Organics, Inc., hired Andy Hernandez to sell organic produce. Later, Hernandez signed an agreement not to compete with Access for two years following the termination of his employment. He did...

Suppose that while performing a high-speed wheelie on a motorcycle, Bruno is injured by the intentionally reckless act of an X Entertainment employee. Will a court be likely to enforce the...

Ethicon, Inc., a pharmaceutical company, entered into an agreement with UPS Supply Chain Solutions, Inc., to transport pharmaceuticals. Under a con-tract with UPSs subsidiary, Worldwide Dedicated...

Oxy Corp. is negotiating with the Wick Construction Co. for the renovation of the Oxy corporate head quarters. Wick, the owner of the Wick Construction Co., is also one of the five members of the...

1. How much obedience and loyalty does an agent employee owe to an employer? What if the employer engages in an activityor requests that the employee engage in an activitythat violates the employees...

Senior, Ltd., acquires all of the stock of JuniorCo for $30 million at the beginning of year 1. The group immediately elects to file income tax returns on a consolidated basis. Seniors operations...

Thomas Ellis signed an agreement with the BlueSky Charter School to serve as its director for one year, from July 1 to June 30. A sentence in bold type stated that the employment was at will. The...

1. Siwek took his new Buick to his dealer for minor repairs. While the car was in the dealers repair shop, the dealer informed Siwek that the car was equipped with a Chevrolet engine. The standard...

1. At a special meeting, the board of directors of Family Federal Savings & Loan Association asked Newton, its president, manager, and director, to resign. He did so. Shortly thereafter, a reporter...

Helen was a very forgetful person, so she had placed her bank code (PIN number) on the back of her debit card. A thief stole Helens card and was able to take $100 from an ATM on the day of the theft....

Onderdonk entered a retirement home operated by Presbyterian Homes. The contract between Onderdonk and the home required Onderdonk to make a specified monthly payment that could be increased by the...

Metalcrafters made a contract to design a new earth- moving vehicle for Lamar HighwayConstructionCo. Metalcrafters was depending on the genius of Samet, the head of its research department, to design...

When she was in college, Jammie Thomas-Rasset wrote a case study on Napster, the online peer-to-peer (P2P) file- sharing net-work, and knew that it was shut down because it was illegal. Later,...

In a qualifying reorganization, Cato exchanges $1.2 million worth of stock and property valued at $500,000 ($245,000 basis) for all of Firestar's assets, which have a value of $1.7 million and a...

Two stockbrokers, in clear violation of the rules of their employer, sold worthless stocks to unsuspecting customers. There was no question that the brokers did not have actual or implied authority...

1. What is wrong with this surveillance log? 2. Why is it important to take detailed notes during surveillance and covert operations? The following surveillance log was taken during two fixed-point...

The Mayor of the City of New York took issue with a number of works in a Brooklyn Museum temporary exhibit titled "Sensation: Young British Artists from the Saatchi Collection." Especially troubling...

Describe the relationship between fraud, net income, profit margin, and the revenue required to make up for fraud losses.

By examining first digits, Company XXX suspects fraud. You are asked to review the sample of invoices shown on the previous page to see if they make sense. You are familiar with several fraud...

1. List and briefly describe the six different types of fraud symptoms. 2. Describe the different fraud symptoms present at MHZ, Inc. 3. Assume that Hal has access to the companys income statement...

Kalen is a seventeen-year-old minor who has just graduated from high school. He is attending a university two hundred miles from home and has contracted to rent an apartment near the university for...

First Niles Financial, Inc. is a company whose sole business is to own and operate a bank, Home Federal Savings and Loan Association of Niles, Ohio. First Niless directors include bank officers...