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4 9 . Sally is an attorney who computes her taxable income using the cash method of accounting. Sage Corporation, owned 4 0 % by

49.Sally is an attorney who computes her taxable income using
the cash method of accounting. Sage Corporation, owned 40% by Sallys brother, 40% by
her cousin, and 20% by her grandmother, uses the accrual method of accounting. Sally is a
calendar-year taxpayer, whereas Sage Corporations fiscal year ends on January 31. During
2023, Sally does some consulting work for Sage Corporation for a fee of $10,000. The
work is completed on December 15 and Sage receives Sallys invoice on that date. For each
of the following assumptions, answer the following questions: During which tax year must
Sally report the income? During which tax year must Sage Corporation deduct the expense?
a. The payment to Sally is made on December 27,2023.
b. The payment to Sally is made on January 12,2024.
c. The payment to Sally is made on February 3,2024
54. During the current year, Kim incurs the following expenses
with respect to her beachfront condominium in Hawaii:
Expense Items Amount
Insurance $ 500
Repairs and maintenance 700
Interest on mortgage 3,000
Property taxes 1,000
Utilities 800
Depreciation $8,000
During the current year, Kim used the condominium 20 days for vacation. She rented it
out for a total of 60 days, generating a total gross income of $9,100.
a. What are the total amounts of deductions for and from AGI that Kim may take with
respect to the condominium using the IRS allocation method?
b. What is the effect on the basis of the condominium?

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