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Posted on Jun 26, 2024

1. Due to the population change, the Goose Creek School District has decided to close one of its high schools. Since it has no further

1. Due to the population change, the Goose Creek School District has decided to close one of its high schools. Since it has no further need of the property, the school is listed for sale. It received two bids. One was from the United Methodist Church for $1,700,000; the other was from Planet Motors for $1,600,000. The United Methodist Church would use the property to establish a sectarian middle school. Planet, a well-known car dealership, would revamp the property and operate it as a branch location. If you were a member of the School District board, what factors would you consider in evaluating the two bids? 2. Several years ago, Gordon purchased extra grazing land for his ranch at a cost of $80,000. In 2010, the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Gordon receives $200,000 for the land. Within the same year, he replaces the property with other grazing land. What is Gordon's tax situation if the replacement land cost: $70,000? $120,000? $210,000? Why? 3. Edward operates an illegal drug-running business and has the following items of income and expense. What is Edward's adjusted gross income from this operation? Income: $750,000 Expenses: Rent 24,000 Utilities 8,000 Bribes to police 40,000 Medical expense 5,000 Legal fees 20,000 Depreciation 30,000 Illegal kickbacks 35,000 Cost of goods sold 300,000 4. In 2010, Emily invests $100,000 in a limited partnership that is not a passive activity. During 2010, her share of the partnership loss is $70,000. In 2011, her share of the partnership loss is $50,000. How much can Emily deduct in 2010 and 2011? 5. Norm purchases a new sports utility vehicle (SUV) on October 12, 2010, for $50,000. The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time for business and it is the only business asset acquired by Norm during 2010. Compute the maximum deduction with respect to the SUV for 2010. If Congress reenacts additional first-year depreciation for 2010, Norm elects not to take additional first-year depreciation 6. Louis sold his farm during the current taxable year. At the date of the sale, the farm had an adjusted basis of $212,000 and was encumbered by a mortgage of $190,000. The buyer paid him $110,000 in cash, agreed to take the title subject to the $190,000 mortgage, and agreed to pay him $80,000 with interest at 9 percent one year from the date of sale. How much is Louis' recognized gain on the sale? 7. Gene is single and for 2010 has AGI of $40,000. He is age 65 and has no dependents. For 2010, he has itemized deductions from AGI of $7,000. Determine Gene's taxable income for 2010 8. In the current year, Bo accepted employment with a Kansas City law firm after graduating from law school. Her expenses for the year are listed below: Cost of bar review course $1,500 Qualified moving expenses 2,100 Job hunting expenses 1,800 Subscriptions to legal journals 450 Membership dues in bar associations 620 State bar dues 300 As Bo worked just part of the year, her salary was only $32,100. In terms of deductions from AGI, how much does Bo have? 1. Due to the population change, the Goose Creek School District has decided to close one of its high schools. Since it has no further need of the property, the school is listed for sale. It received two bids. One was from the United Methodist Church for $1,700,000; the other was from Planet Motors for $1,600,000. The United Methodist Church would use the property to establish a sectarian middle school. Planet, a well-known car dealership, would revamp the property and operate it as a branch location. If you were a member of the School District board, what factors would you consider in evaluating the two bids? 2. Several years ago, Gordon purchased extra grazing land for his ranch at a cost of $80,000. In 2010, the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Gordon receives $200,000 for the land. Within the same year, he replaces the property with other grazing land. What is Gordon's tax situation if the replacement land cost: $70,000? $120,000? $210,000? Why? 3. Edward operates an illegal drug-running business and has the following items of income and expense. What is Edward's adjusted gross income from this operation? Income: $750,000 Expenses: Rent 24,000 Utilities 8,000 Bribes to police 40,000 Medical expense 5,000 Legal fees 20,000 Depreciation 30,000 Illegal kickbacks 35,000 Cost of goods sold 300,000 4. In 2010, Emily invests $100,000 in a limited partnership that is not a passive activity. During 2010, her share of the partnership loss is $70,000. In 2011, her share of the partnership loss is $50,000. How much can Emily deduct in 2010 and 2011? 5. Norm purchases a new sports utility vehicle (SUV) on October 12, 2010, for $50,000. The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time for business and it is the only business asset acquired by Norm during 2010. Compute the maximum deduction with respect to the SUV for 2010. If Congress reenacts additional first-year depreciation for 2010, Norm elects not to take additional first-year depreciation 6. Louis sold his farm during the current taxable year. At the date of the sale, the farm had an adjusted basis of $212,000 and was encumbered by a mortgage of $190,000. The buyer paid him $110,000 in cash, agreed to take the title subject to the $190,000 mortgage, and agreed to pay him $80,000 with interest at 9 percent one year from the date of sale. How much is Louis' recognized gain on the sale? 7. Gene is single and for 2010 has AGI of $40,000. He is age 65 and has no dependents. For 2010, he has itemized deductions from AGI of $7,000. Determine Gene's taxable income for 2010 8. In the current year, Bo accepted employment with a Kansas City law firm after graduating from law school. Her expenses for the year are listed below: Cost of bar review course $1,500 Qualified moving expenses 2,100 Job hunting expenses 1,800 Subscriptions to legal journals 450 Membership dues in bar associations 620 State bar dues 300 As Bo worked just part of the year, her salary was only $32,100. In terms of deductions from AGI, how much does Bo have? 1. Due to the population change, the Goose Creek School District has decided to close one of its high schools. Since it has no further need of the property, the school is listed for sale. It received two bids. One was from the United Methodist Church for $1,700,000; the other was from Planet Motors for $1,600,000. The United Methodist Church would use the property to establish a sectarian middle school. Planet, a well-known car dealership, would revamp the property and operate it as a branch location. If you were a member of the School District board, what factors would you consider in evaluating the two bids? 2. Several years ago, Gordon purchased extra grazing land for his ranch at a cost of $80,000. In 2010, the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Gordon receives $200,000 for the land. Within the same year, he replaces the property with other grazing land. What is Gordon's tax situation if the replacement land cost: $70,000? $120,000? $210,000? Why? 3. Edward operates an illegal drug-running business and has the following items of income and expense. What is Edward's adjusted gross income from this operation? Income: $750,000 Expenses: Rent 24,000 Utilities 8,000 Bribes to police 40,000 Medical expense 5,000 Legal fees 20,000 Depreciation 30,000 Illegal kickbacks 35,000 Cost of goods sold 300,000 4. In 2010, Emily invests $100,000 in a limited partnership that is not a passive activity. During 2010, her share of the partnership loss is $70,000. In 2011, her share of the partnership loss is $50,000. How much can Emily deduct in 2010 and 2011? 5. Norm purchases a new sports utility vehicle (SUV) on October 12, 2010, for $50,000. The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time for business and it is the only business asset acquired by Norm during 2010. Compute the maximum deduction with respect to the SUV for 2010. If Congress reenacts additional first-year depreciation for 2010, Norm elects not to take additional first-year depreciation 6. Louis sold his farm during the current taxable year. At the date of the sale, the farm had an adjusted basis of $212,000 and was encumbered by a mortgage of $190,000. The buyer paid him $110,000 in cash, agreed to take the title subject to the $190,000 mortgage, and agreed to pay him $80,000 with interest at 9 percent one year from the date of sale. How much is Louis' recognized gain on the sale? 7. Gene is single and for 2010 has AGI of $40,000. He is age 65 and has no dependents. For 2010, he has itemized deductions from AGI of $7,000. Determine Gene's taxable income for 2010 8. In the current year, Bo accepted employment with a Kansas City law firm after graduating from law school. Her expenses for the year are listed below: Cost of bar review course $1,500 Qualified moving expenses 2,100 Job hunting expenses 1,800 Subscriptions to legal journals 450 Membership dues in bar associations 620 State bar dues 300 As Bo worked just part of the year, her salary was only $32,100. In terms of deductions from AGI, how much does Bo have