Questions and Answers of Federal Taxation 2023 Comprehensive

Murray Corporation’s stock is owned by about 1,000 shareholders, none of whom own more than 1% of the outstanding shares. Pursuant to a tender offer, Said, an individual investor, purchased all the
In 2022, Sondra makes taxable gifts aggregating $300,000. Her only other taxable gifts amount to $200,000, all of which she made in 1997.a. What is Sondra’s 2022 gift tax liability?b. What is her
Refer to the facts of Problem C:12-36 and assume the current year is 2022. Emily’s prior gifts are as follows:What is Emily’s current year gift tax liability? Year 1974 1998 Amount of Taxable
Amir made taxable gifts as follows: $800,000 in 1975, $1.2 million in 1999, and $600,000 in 2022. What is Amir’s gift tax liability for 2022?
In March 2022, Marge (age 67) engages in the following transactions. Determine the amount of the completed gift, if any, arising from each of the following events. Assume 4% is the applicable
In 2022, Henry and his wife, Wendy, made the gifts shown below. All gifts are of present interests. What is Wendy’s gift tax payable for 2022 if the couple elects gift splitting and Wendy’s
During 2022, Will gives $40,000 cash to Will, Jr. nd a remainder interest in a few acres of land to his friend Suzy. The remainder interest is valued at $32,000. Will and his wife, Helen, elect gift
In earlier years, neither Hugo nor Wanda, his wife, made any taxable gifts. In 2021, Hugo gave $15,000 cash to each of his nieces, nephews, and grandchildren, 30 individuals in total. In 2022, Wanda
In June 2021, Karen transferred property with a $75,000 FMV and a $20,000 adjusted basis to Hal, her husband. Hal dies in March 2022; the property has appreciated to $85,000 in value by then. His
In March 2022, Ginger Graham, age 46 and wife of Greg Graham, engaged in the transactions described below. Determine Ginger’s gift tax liability for 2022 if she and Greg elect gift splitting and
Ned Norris, a widower, engaged in the transactions described below during 2021. He made only one earlier taxable gift, $1.2 million in 2014. Use this information to prepare a 2021 gift tax return
Annie James died early in 2022. All her property passed subject to her will, which provides that her surviving husband, Dave James, is to receive all the property outright. Her will further states
Beth died on May 3, 2022. Her executor elected date-of-death valuation. Beth’s gross estate included, among other properties, the items listed below. What is the estate tax value of each
Sue died on May 3, 2022. On October 1, 2018, Sue gave her son Tom land valued at $17,015,000. Sue applied a unified credit of $4,417,800 against the gift tax due on this transfer. On Sue’s date of
Mary died on April 3, 2022. As of this date, Mary’s gross estate was valued at $16.5 million. On October 3, Mary’s gross estate was valued at $15.8 million. The estate neither distributed nor
Val died on May 13, 2022. On July 3, 2019, she gave a $400,000 life insurance policy on her own life to son Ray. Because the value of the policy was relatively low, the transfer did not cause any
In December 2019, Jody transferred stock having an $16,115,000 FMV to her daughter Joan. Jody paid $1,880,000 ($6,385,800 2 $4,505,800) of gift taxes on this transfer. When Jody died in January 2022,
In December 2019, Curt and Kate elected gift splitting to report $32,230,000 of gifts of stocks Curt made to Curt, Jr. Each paid gift taxes of $1,968,000 by spending his or her own funds. Kate died
John died in 2022. What amount, if any, was included in his gross estate in each of the following situations:a. In 2007, John created a revocable trust, funded it with $400,000 of assets, and named a
Twelve years ago, Latoya transferred property to an irrevocable trust with a bank trustee. Latoya named Al to receive the trust income annually for life and Pat or Pat’s estate to receive the
When Yuji died in March 2022, his gross estate was valued at $15 million. He owed debts totaling $300,000. Funeral and administration expenses were $12,000 and $120,000, respectively. Yuji willed his
Ten years ago, Art purchased land for $60,000 and immediately titled it in the names of Art and Bart, joint tenants with right of survivorship. Bart paid no consideration. In 2022, Art died and was
Will, a bachelor, died in 2022. At that time, his sole asset was cash of $15 million. Assume no debts or funeral and administration expenses and no charitable bequests. His gift history was as
Elaine died on May 1, 2022. Her gross estate consisted of the following items:Elaine’s Sec. 2053 deductions totaled $200,000. She had no other deductions.a. What percentage of Elaine’s federal
Assume the same facts as in Problem C:13-48 and that before Yuji’s death in 2022 his wife already owned property valued at $300,000. Assume that each asset owned by each spouse increased 8% in
Sam Snider died February 14, 2020, survived by his spouse Janet and several children. Sam had not made any taxable gifts. Sam’s gross estate was $7 million. In each of the following independent
Bess, a widow, died in October 2022. Her gross estate, which totaled $12.5 million, included a $100,000 life insurance policy on her life that she gave away in 2019. The taxable gift that arose from
Maria Martinez died in 2022, survived by her spouse, Sergio, and two adult children. Her gross estate, all of which passed under her will, was valued at $17.2 million. She had Sec. 2053 deductions of
Joseph Jernigan died in 2022 with a taxable estate of $14.1 million. He was survived by his spouse Josephine and several children. He made taxable gifts of $100,000 in 1974 and $650,000 in 2000. The
Jeung Hong, a widower, died in March 2022. His gross estate was $14.5 million and, at the time of his death, he owed debts of $60,000. His will made a bequest of $200,000 to his undergraduate alma
Giovanni died in 2022 with a gross estate of $13.9 million and debts of $30,000. He made post-1976 taxable gifts of $100,000, valued at $80,000 when Giovanni died. His estate paid state death taxes
Bonnie died on June 1, 2022, survived by her husband, Abner, and two sons, Carl and Doug. Bonnie’s only lifetime taxable gift was made in October 2020 in the taxable amount of $13.25 million. She
Gaylord Gunnison (GG) died January 13, 2022, and his gross estate consisted of three properties—cash, land, and stock in a public company. The amount of cash on the date of his death was $10.9
Matt Patterson died in early 2022 with a $16.5 million gross estate and no deductions other than a potential marital deduction. He bequeathed all his property to his spouse, Nancy, with the provision
Prepare an estate tax return (Form 706) for Adam Zugg of 45 Cornfield Place, Midwest City, IL 60000. Adam died October 31, 2021. He was survived by his wife, Callie, and their son, Zebulon. At the
Your client is Jon Jake, the executor of the Estate of Beth Adams, a widow. Mrs. Adams died 11 years after the death of her husband, Sam. Mr. Jake seeks assistance in the preparation of the estate
Arthur Zolnick died at age 84 on December 7, 2022. In March 2017, he transferred $4 million of stock to a charitable remainder annuity trust (CRAT) from which he named himself to receive $200,000 per
Permetemp Corporation (EIN: XX-1234567) formed in 2020 and, for that year, reported he following book income statement and balance sheet, excluding the federal income tax expense, deferred tax
Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The corporation uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of
Mike Barton owns Barton Products, Inc. The corporation has 30 employees. Barton Corporation expects $800,000 of net income before taxes in 2022. Mike is married and files a joint return with his
Doug is a single taxpayer. In 2021, he had wage income of $115,000 from his employer. In addition to his wage income, Doug was a consultant in which he made an additional $75,000 of net income from
Barbara was divorced two years ago. However, the final property settlement and determination of alimony payments was not made until February 2022 because of extended litigation. Barbara received a
Explain the difference between closed-fact and open-fact situations.
What are the Sec. 351 reporting requirements?
Delta Corporation incurs a $100,000 NOL in 2022. In 2023, the corporation reports the following items:Even though the numbers in this problem are small, assume that Delta does not qualify for the
Zeta Corporation’s taxable income for 2021 was $1.1 million, on which Zeta paid federal income taxes of $231,000. Zeta estimates calendar year 2022’s taxable income to be $2 million, on which it
Wright Corporation’s taxable income for calendar years 2019, 2020, and 2021 was $120,000, $150,000, and $100,000, respectively. Its total tax liability for 2021 was $21,000. Wright estimates that
Molly, whose tax rate is 37%, sells an apartment complex for $4.5 million with 10% of the price allocated to land. The apartment complex was purchased in 1994. She has no other sales or exchanges
No, the alternative minimum tax does not apply if an individual's tentative minimum tax is less than his regular tax liability. It applies only if the tentative minimum tax exceeds the regular tax
Which of the following are tax preference items for purposes of computing the individual AMT?a. Net long-term capital gainb. Excess depreciation for real property placed in service before 1987c.
Alice is a single mother, 37 years old, and has two qualifying children, ages 3 and 6. In 2022, she earns $25,000 in wages resulting in $25,000 of AGI. Is Alice eligible for the earned income credit?
What is backup withholding? What is its purpose?
Vincent anticipates that his actual tax liability for the tax year will be $12,000 and that federal income taxes withheld from his salary will be $9,000. Thus, when he files his current year income
William and Maria Smith are a married couple filing jointly. They have no children and report the following items in 2022:a. What is the Smith’s AMT liability?b. What would be William’s AMT
Jose, an unmarried taxpayer filing single with no dependents, has AGI of $600,000 and reports the following items in 2022:What is Jose’s AMT liability for 2022? Taxable income Tax preferences AMT
Dylan is a single taxpayer with $600,000 of taxable income, which results in a regular tax liability of $184,955 in 2022. Dylan is extremely cautious about being subject to AMT and wants to know how
Allen, an unmarried taxpayer filing single, has no dependents and reports the following items on his 2022 federal income tax return:a. What is the amount of Allen’s AMT adjustments related to
Amelia has wages of $45,000 and net income from a small unincorporated business of $70,000 for 2022.a. What is the amount of Amelia’s self-employment (SE) tax and deduction for AGI for her SE
Arnie and Angela are married and file a joint return in 2022. Arnie is a partner in a public accounting firm. His share of the partnership’s income in the current year is $40,000, and he receives
Anita, a single taxpayer, reports the following items for 2022:a. What is the amount of Anita’s self-employment tax?b. How would your answer to Part a change if Anita’s salary were $160,000?
In each of the following independent situations, determine the amount of the child and dependent care tax credit. (Assume that both taxpayers are employed and the year is 2022.)a. Brad and Bonnie are
Brad and Valerie decided to adopt a child and contacted an adoption agency in August 2021. After extensive interviews and other requirements (such as financial status, etc.), Brad and Valerie were
Lou and Stella North are married, file a joint return, and have two dependent children in college, Phil and Jaci. Phil attends a State University in a neighboring state, and Jaci attends a State
Carolyn is unmarried and has one dependent child, age 6, who lived with her for the entire year. In 2022, she has income of $16,000 in wages and $6,000 of unearned income (none of which was
Jose is unmarried with no qualifying children. He has $9,500 of 2022 wages and is otherwise eligible for the earned income credit. Jose has $200 of interest income and no for AGI deductions.a. What
Latisha is an unmarried taxpayer, filing head of household. She has two dependent children (7-year-old twins) who lived with her all year. Her 2022 earned income was $18,600, her AGI was $22,700, and
Reagan and Grady Wade are married with three qualifying children under the age of 17. In 2021, Reagan and Grady had earned income of $50,000 and no adjustments. Line 11 of their 1040 reports AGI of
Milton (SSN 111-22-1111) is 66 years old and unmarried, filing single with no dependents. He had no transactions involving any virtual currency during the year. He had the following income and
Mike, a self-employed consultant, incurs the following business-related expenses in 2022:Actual automobile expenses....................................................................$ 2,500Moving
a. Keith Thomas and Trent Brooks began a new consulting business on January 1, 2022. They organized the business as a C corporation, KT, Inc. During 2022, the corporation was successful and generated
In 2022, Paul, who is single, has a comfortable salary from his job as well as income from his investment portfolio. However, he is habitually late in filing his federal income tax return. He did not
In April 2022, Dan is audited by the IRS for the year 2020. During the course of the audit, the agent discovers that Dan’s deductions for business travel are unsubstantiated and a $600 deficiency
The following information relates to Tom, a single taxpayer, age 18:Wages....................................................$7,000Taxable interest income...........................425Itemized
Wes and Tina are a married couple and provide financial assistance to several persons during the current year. For the situations below, determine whether the individuals qualify as Wes and Tina’s
Robert provides more than half of the support for his daughter, Jane, and her two children. Jane earned $20,000.Robert, whose AGI is $160,000, paid the rent of $11,000 on Jane’s apartment and
Determine which of Schedules 1 through 3 the taxpayer(s) will file with Form 1040 for each case:a. Abby and Bert are married, file a joint tax return, and have two qualifying children (ages 4 and 8).
How many dependents does the taxpayer have, assuming the people involved are U.S. citizens? What amount of credit may be claimed for the taxpayer’s dependents?a. Andrew supports his cousin Mary,
Bill and Mary plan to marry in December 2022. Bill’s salary is $112,000 and he owns his residence. His itemized deductions total $21,700. Mary’s salary is $94,000. Her itemized deductions total
Which of the following taxpayers must file a 2022 return?a. Amy, age 19 and single, has $8,050 of wages, $800 of interest, and $350 of self employment income.b. Betty, age 67 and single, has a
For the following independent situations, determine the filing status for the years in question (all individuals are U.S. citizens). a. Wayne and Celia had been married for 24 years before Wayne
Virginia is a cash-basis, calendar-year taxpayer. Her salary is $90,000, and she is single. She plans to purchase a residence in 2023. She anticipates her property taxes and interest will total
Pat was divorced from her husband in 2012. During the current year she received alimony of $18,000 and child support of $4,000 for her 11-year-old son, who lives with her. Her former husband had
Assume the same facts as in Problem I:6-40, except that Big Bang LLP incurs $51,000 in expenses, and it does not already own the other entertainment galleries and it does not own anything similar.a.
Bryce, a bank official, is 40 years old, unmarried and has no dependents. During 2022 he engages in the following activities and transactions:a. Being an avid fisherman, Bryce develops an expertise
Ellen is a single taxpayer who is considering two job offers. Ellen considers both accounting firms to be equally desirable in terms of the opportunities for long-term career growth. But the
Deductions for individual taxpayers are classified as either for AGI or from AGI. Discuss the two categories of for AGI deductions.
Are deductions allowed for entertainment expenses of customers or clients in 2022?
Would education expenses incurred by a self employed individual be allowed in 2022 for the following expenses?Cost of a CPA review
Bass Corporation purchases 10 tickets to the Super Bowl in February 2022 for entertaining its customers. Due to unusually high demand, the tickets have to be purchased for $25,000 (10 : $2,500). The
David is an independent contractor who has been in the consulting business for several years. David has applied and been accepted into a prestigious MBA program. The program is two years in duration.
Mary is self-employed and incurs $3,600 of business-related travel and entertainment expenses during 2022 in which she was away from home overnight. These business expenses include the
Mike is an independent contractor in 2022. Mike attends a professional trade association convention in Los Angeles. He spends three days at the meeting and two days vacationing before the meeting.
Michelle is self-employed and uses her personal automobile for business trips. During 2022, Michelle drives her car 60% for business use and incurs the following total expenses (based on 100% use of
Amelie is self-employed and uses her personal automobile in connection with her business. During 2022, Amelie drove her car a total of 28,000 miles. Her business log shows that she drove 22,400 miles
Dana manages real estate and is a cash method taxpayer. She changes to the accrual method in 2023. Dana’s business income for 2023 is $30,000 computed on the accrual method. Her books show the
This tax form/return preparation problem uses the same information as Problem I:7-62EXCEPT it applies to the 2021 tax year rather than 2022. Actual government tax forms for 2022 are unavailable at
Michelle and Mark are married and file a joint return. Michelle owns an unincorporated dental practice. Mark works part-time as a high school math teacher, and spends the remainder of his time caring
Kara and Brandon Arnold are married and file a joint return. Their Social Security numbers are 000-00-1111 and 000-00-2222, respectively. Kara and Brandon have one son, Henry, age 3. His Social
On January 30, 2022, Amy sells land to Bob for a stated price of $200,000. The full $200,000 is payable on January 30, 2024. No interest is stated. Amy, a cash-method taxpayer, purchased the land in
BCD Partnership has, for many years, had a March 31 year-end. The partnership’s net income for the fiscal year ended March 31, 2023 is $400,000. Because of its fiscal year, BCD has $100,000 on

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