Catherine (wife) and Peter (husband) Mallen had lived together unmarried for some four years when Catherine got pregnant and a marriage was arranged. Peter asked Catherine to sign a prenuptial...

Minority shareholders of Midwest Technical Institute Development Corporation, a closed-end investment company owning assets consisting principally of securities of companies in technological fields,...

Kim went to Lings Market to pick up a few items for dinner. It was a stormy day, and the wind had blown water through the markets door each time it opened. As Kim entered through the door, she...

AOL, LLC, mistakenly made public the personal information of 650,000 of its members. The members filed a suit, alleging violations of California law. AOL asked the court to dismiss the suit on the...

Interpret each of the following citations: a. 54 T.C. 1514 (1970). b. 408 F.2d 1117 (CA2, 1969). c. 691 USTC 9319 (CA2, 1969). d. 23 AFTR 2d 691090 (CA2, 1969). e. 293 F.Supp. 1129 (D.Ct. Miss.,...

George and Aimee are married. George has wage income of $190,000, and Aimee has a sole proprietorship that generated net income of $85,000. They also have interest and dividend income of $21,000....

Potomac Leasing Co. leased an automatic telephone system to Vitality Centers. Claudene Cato signed the lease as guarantor of payments. When the rental was not paid, Potomac Leasing brought suit...

Leilei operates a sole proprietorship, using the accrual basis of tax accounting. Last year, she claimed a $10,000 bad debt deduction for a receivable from Jackie. But this year, Jackie sent her a...

Dr. North, a surgeon practicing in Georgia, engaged an Arizona professional corporation consisting of twenty lawyers to represent him in a dispute with a Georgia hospital. West, a member of the law...

Sutcliffe Banton, dba Nemard Construction, furnished labor and materials (valued at $162,895) for improving Vicky Deafeamkpors New York City residential property. She paid only $41,718, leaving...

Jason and Jill are married and have a six-year-old daughter. During the year, they sell one acre of land for $80,000. Three years ago, they paid $70,000 for two acres of land. Their other income and...

Delta Corporation incorporates on January 7, begins business on July 10, and elects to have its initial tax year end on October 31. Delta incurs the following expenses between January and October...

Roslyn is a food buyer for Organic Cornucopia Food Company when she decides to go into business for herself as Roslyns Kitchen. She contacts Organics suppliers, offering to buy their entire harvest...

On January 1 of the current year, Rhondell Corporation has accumulated E & P of $13,000. Current E & P for the year is $84,000, earned evenly throughout the year. Elizabeth and Jonathan are sole...

Jeff, a 52% owner of an S corporation, has a stock basis of zero at the beginning of the year. Jeff's basis in a $10,000 loan made to the corporation and evidenced by a corporate note has been...

Macrotech, Inc., develops an innovative computer chip and obtains a patent on it. The firm markets the chip under the trade- marked brand name Flash. Macrotech wants to sell the chip to Nitron, Ltd.,...

Can a creditor of both the husband and wife under the same obligation obtain an execution against a Winnebago mobile home owned by the husband and wife in tenancy by entirety?

Assume that Congress amends the tax law to provide for a maximum 20 percent rate on royalty income. Calculate the annual tax savings from this new preferential rate to each of the following...

The Obstacles (a) A Newsweek article on business ethics concludes, Even in todays complex world, knowing whats right is comparatively easy. Its doing whats right thats hard. Explain why this...

Smith & Smith, a U. S. computer firm, contracted to install a computer system for Volkswagen in the companys headquarters in Berlin, Germany. Smiths contract included the following liability...

Josef Boehm was an officer and the majority shareholder of Alaska Industrial Hardware, Inc. (AIH), in Anchorage, Alaska. In August 2001, Lincolnshire Management, Inc., in New York, created AIH...

Joseph Mitsch purchased a used Chevrolet Yukon SUV vehicle from Rockenbach Chevrolet. The Yukon was manufactured by General Motors Corporation (GMC). The Yukon had been driven over 36,000 miles. The...

Firm OCS sold business equipment with a $20,000 initial cost basis and $7,315 accumulated tax depreciation. In each of the following cases, compute OCSs recaptured ordinary income and Section 1231...

After Edward Miller left his job as a salesperson at the New England Insurance Agency, Inc., he took some of his New England customers to his new employer. At New England, the customer lists had been...

Marlin Company has suspected something fishy for several months. It has noticed that its profits have been slowly decreasing, while revenues have been increasing. After consulting with you, a fraud...

KTR Company earns a $10 profit on each unit of manufactured goods, and it sells 20 million units each year. KTRs income tax rate is 20 percent. However, the jurisdiction in which KTR operates just...

Elaine Case (single with no dependents) has the following transactions in 2014: AGI (exclusive of capital gains and losses) ....... $240,000 Long-term capital gain ............... 22,000 Long-term...

Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Tax Basis Accounts receivable ..$ 32,000...

This chapter included an example of a manufacturing firm that had problems with employee theft of tools. The company decided that it would search every employees lunch box at the end of each shift....

Janice Dempsey has just started her own tax preparation firm. She has leased office space in a building, and she is incorporating her business as a Subchapter S corporation under the Internal Revenue...

Dain's Diamond Bit Drilling purchased the following assets this year. Assume its taxable income for the year was $53,000 before deducting any 179 expense (assume no bonus depreciation but assume that...

Dale Dyer, who was employed by National By-Products, Inc., was seriously injured at work as the result of a job-related accident. He agreed to give up his right to sue the employer for damages in...

1. Under what doctrine discussed in this chapter might Buy-Mart be held liable for the tort committed by Watts? 2. What is the key factor in determining whether Buy-Mart is liable under this...

Middleton Motors, Inc., a struggling Ford dealership in Madison, Wisconsin, sought managerial and financial assistance from Lindquist Ford, Inc., a successful Ford dealership in Bettendorf, Iowa....

Bogash drew a check on National Safety Bank and Trust Co. payable to the order of Fiss Corp. At the request of Fiss Corp., the bank certified the check. The bank later refused to make payment on the...

During the current year, Gnatcatcher, Inc., (E & P of $1 million) distributed $200,000 each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their...

Fresher Foods, Inc., orally agreed to purchase one thousand bushels of corn for $1.25 per bushel from Dale Vernon, a farmer. Fresher Foods paid $125 down and agreed to pay the remainder of the...

During the current year, Zeta Corporation distributes the assets listed below to its sole shareholder, Susan. For each asset listed, determine the gross income recognized by Susan, her basis in the...

Milan purchased saffron extract, marketed as Americas Hottest New Way to a Flat Belly, online from Dr. Chen. The Web site stated that recently published studies showed a significant weight loss (more...

Timothy keeps a pet chimpanzee, which is thoroughly tamed and accustomed to playing with its owners children. The chimpanzee escapes, despite every precaution to keep it upon its owners premises. It...

Clark, who owned a vacant lot, and Bird, who was engaged in building houses, entered into an oral agreement by which Bird was to erect a house on the lot. Upon the sale of the house and lot, Bird was...

Reggie wants to invest $10,000. His options are a. Gibraltar Corporation bonds with an annual interest rate of 8%. b. State of Hawaii bonds with an annual interest rate of 5%. c. Series EE savings...

Mr. Gennone maintained a checking account at Peoples National Bank & Trust Company of Pennsylvania (Bank). Gennone noticed that he was not receiving his bank statements and canceled checks. When...

(Multiple-Choice Questions) 1. A principal will not be liable to a third party for a tort committed by an agent: A. Unless the principal instructed the agent to commit the tort B. Unless the tort was...

Craig Ferguson, an internal auditor for HHG Online Booksellers, had been investigating a case of embezzlement fraud for nearly two months. After searching personnel and company records, visiting with...

Karl Allen and Renee Galzo choose to be the sole owners and managers of a financial services business, Allen-Galzo & Associates LLP. Allen holds the copyright to investment analysis software that he...

The Hyperion Company has an authorized capital stock of one thousand shares with a par value of $100 per share, of which nine hundred shares, all fully paid, were outstanding. Having an ample...

Aric Toll owns and manages the Balboa Island Village Inn, a restaurant and bar in Newport Beach, California. Anne Lemen owns the Island Cottage, a residence across an alley from the Inn. Lemen often...

Continue with the facts presented in Problem 33. In problem Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in...

Jane Richards was employed as the sole crane operator of Gale Corp. and held the part-time union position of shop steward for the plant. On May 15, Richards complained to OSHA concerning what she...

Sullivan sold t-shirts with the name Boston Marathon and the year of the race imprinted on them. The Boston Athletic Association (BAA) sponsors and administers the Boston Marathon and has used the...

(Multiple choice) 1. Which of the following aspects of fraud usually results in the largest savings? a. Fraud prevention. b. Fraud detection. c. Fraud investigation. d. It is impossible to tell. 2....

Basic Research, L. L. C., advertised its products on television networks owned by Rainbow Media Holdings, Inc., through an ad agency, Icebox Advertising, Inc. As Basics agent, Icebox had the express...

Go to this texts Web site at academic. cengage.com/blaw/clarkson and select Chapter 44. Click on Video Questions and view the video titled Advertising Communication Law: Bait and Switch. Then answer...

Each year, Tom and Cindy Bates normally have itemized deductions of $10,000, including a $4,000 pledge payment to their church. Upon the advice of a friend, they do the following: in early January...

Jane Leeves declared voluntary Chapter 7 bankruptcy. The trustee included the following property in her bankruptcy estate: Janes wedding ring Janes computer for her consulting business that she...

Woodridge USA Properties, L. P., bought eighty- seven commercial truck trailers from Southeast Trailer Mart, Inc. (STM). Gerald McCarty, an independent sales agent who arranged the deal, showed...

Sarah came home one day to find significant water damage in her home. Apparently one of the hoses to her washing machine had worn out and split, spilling water all over the place. Over the next...

Mark Womer and Brian Perry were members of the U.S. Navy and were stationed in Newport, Rhode Island. On April 10, Womer allowed Perry to borrow his automobile so that Perry could visit his family in...

Recall our example of an investment of $100,000 in research that yields a pioneering invention that has no commercial value, and a subsequent investment of $50,000 in development that yields an...

Phillips, Inc., a cash basis C corporation, completes $100,000 in sales for year 1, but only $75,000 of this amount is collected during year 1. The remaining $25,000 from these sales is collected...

Rick Yurko frequently purchased lottery tickets from Phyllis Huisel at the coffee shop she operated. In February 1990, Yurko bought 100 scratchoff lottery tickets, which revealed instant winners when...

Costello hired Sagan to drive his racing car in a race. Sagans friend Gideon promised to pay Sagan $3,000 if she won the race. Sagan won the race, but Gideon refused to pay the $3,000. Gideon...

1. Which of the following is not a control activity (procedure)? a. System of authorizations. b. Appropriate hiring procedures. c. Independent checks. d. Documents and records. e. All of the above...

Visit the Association of Certified Fraud Examiners (ACFE) Web site at www.acfe.com. Once you have logged on, explore the pages of the site and then answer the following questions: a. How many...

For each of the following actions, indicate in which of the six steps (1 through 6) of the tax research process the action would occur. a. Discuss the details of the transaction with the client, to...

This year, Sigma Inc. generated $612,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months. a....

Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2009. In 2010, the corporation had large profits and a surplus...

John, Lesa, and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contribute 20 percent. Nothing is decided about how profits will be...

Hosha exchanges all of her Leaf stock for Petal stock plus $5,000 cash. The exchange is pursuant to a tax-free reorganization. Hosha paid $25,000 for the Leaf stock five years ago. The Petal stock...

Jurisdiction Z levies an excise tax on retail purchases of jewelry and watches. The tax equals 3 percent of the first $1,000 of the purchase price plus 1 percent of the purchase price in excess of...

On March 20, Andy Small became seventeen years old, but he appeared to be at least twenty-one. (a) On April 1, he moved into a rooming house in Chicago where he orally agreed to pay the landlady $300...

Grant, Arthur, and David formed a partnership for the purpose of betting on boxing matches. Grant and Arthur would become friendly with various boxers and offer them bribes to lose certain bouts....

On May 1, by telephone, Yu offers to hire Benson to perform personal services. On May 5, Benson returns Yus call and accepts the offer. Discuss fully whether this contract falls under the Statute of...

L. B. Foster invited Tie and Track Systems Inc. to submit price quotes on items to be used in a railroad expansion project. Tie and Track responded by e-mail on August 11, 2006, with prices for 9...

Sally and Tom are married, have three dependent children, and file a joint return in 2015. If they have adjusted gross income (AGI) of $90,000 and itemized deductions of $10,000, what is their...

Your small company produces and sells holsters for cell phones. During the past year, monthly inventory counts have shown about 100 holsters missing. Furthermore, a customer report gives you reason...

Mary is an employee of ABC corporation and incurs $3,600 of unreimbursed employment-related travel and entertainment expenses during the current year. These business expenses include the following:...

Ion Corporation has income tax expense/payable for book purposes of $200,000 and $250,000 for tax purposes. Assume that Ion will only be able to use $30,000 of any deferred tax asset with the balance...

Facts: The researcher is analyzing a problem involving the sale of goods on credit in state A. Authority: The following authority has been located concerning the problem: 1. State A's Uniform...

The basis of Jeromes partnership interest is $50,000. Jerome receives a pro rata liquidating distribution consisting of $10,000 cash, land with a basis of $40,000 and a fair market value of $60,000,...

Darin bought his fiancée Sarah a 3-carat diamond ring for $43,121 from Mandarin Gems. Later, Mandarin supplied Erstad with a written appraisal valuing the engagement ring at $45,500. Years...

Mini, Inc., earns pretax book net income of $750,000 in 2014. Mini deducted $20,000 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes. Mini records no other...

How is an offer terminated? Assuming that Durbin did not inform Amstel that he was rejecting the offer, was the offer terminated at any time described here? Explain. Shane Durbin wanted to have a...

1. What is the term for the right of Roche citizens to walk across Shoepkes land on the trail? 2. What covenants would most courts infer were included in the warranty deed that was used in the...

C&C Properties is an S corporation that owns two rental real estate undertakings: Carrot Plaza and Cantaloupe Place. Both properties produce an annual $10,000 operating loss. C&Cs Schedule K...

You manage a car dealership in a large city. Many of your sales employees are very successful and have purchased their own vehicles from your dealership. Your dealership finances the sale of some of...

Diana, a partner in the cash basis HDA Partnership, has a one-third interest in partnership profits and losses. The partnerships balance sheet at the end of the current year is as follows: Diana...

If Kolchek had negligently left Litisha alone in the spa prior to the incident described in the previous question, what defense to liability might Porter assert? Shalene Kolchek bought a Great Lakes...

Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the...

1. Brooking agreed to sell a tract of land to Dover Pool & Racquet Club, Inc., on which Dover planned to build a swim and tennis club. Neither party to the contract knew that just before the contract...

Jim, Liz, and Keith are equal partners in the JLK Partnership, which uses the accrual method of accounting. All three materially participate in the business. JLK reports financial accounting income...

Beck was the general manager of Chilkoot Lumber Co. Haines sold fuel to the company. To persuade Haines to sell on credit, Beck signed a paper by which he promised to pay any debt the lumber company...

Kendra Knight took part in a friendly game of touch football. She had played before and was familiar with football. Michael Jewett was on her team. In the course of play, Michael bumped into Kendra...

Look up Bush Brothers & Co., 73 T.C. 424 (1979) and answer the questions below. a. Was the case reviewed by the court? If so, was the decision unanimous? Explain. b. Was the decision entered under...

1. Did GFI have a legitimate reason to expect that Egan would accept the fourth shipment? Why or why not? 2. Does the substitution of carriers in the third shipment constitute a breach of the...

1. One of the advantages of the LLC is that its members enjoy limited personal liability for the companys obligations. In view of this fact, does the possibility that a court may hold an LLC member...

Joan Ohlman, a patient in a hospital, refused medical treatment for her leg infection because she thought swelling was caused by a machine controlled by the President of United States. She told a...

Ball-Mart, a baseball card store, had a 1968 Nolan Ryan rookie card in almost perfect condition for sale. Any baseball collector would have known that the card was worth at least $1,000; the...

Mona found a wallet on the floor of an elevator in the office building where she worked. She posted several notices in the building about finding the wallet, but no one appeared to claim it. She...