As of Dec. 31, 2022, Robby's total assets had a FMV of $110,000. At the beginning of 2022, Robby's total assets had a FMV $80,000. During 2022, Robby spent $20,000 on food, clothing, and other personal expenditures. In addition, the FMV of the 2022 rent for the home that Robby lives in is $20,000. Robby owns the home. Robby earned a salary of $50,000 in 2022.
What is Robby's economic income for 2022? For tax purposes, what is Robby's income for 2022?

 

2. Tory operates a landscape design company. In 2022, Tory provided services worth $190,000. Tory has received payment of $170,000, and has $20,000 in outstanding balances. Of the $20,000
payments due to Tory, $10,000 is backed by a secured negotiable note, and the other $10,000 is unsecured receivables. For tax purposes, what amount of income does Tory report in 2022 as a result of the $190,000 worth of services provided if Tory is a cash-method taxpayer? For tax purposes, what amount of income does Tory report in 2022 as a result of the $190,000 worth of services provided if Tory is an accrual-method taxpayer? Would your answer change if the $10,000 unsecured receivable is the subject of lawsuit alleging Tory did not adequately perform the services, and Tory's attorney believes Tory will lose the lawsuit and not collect the $10,000?

 

3. Salvador purchased a $100,000, 5-year certificate of deposit on January 1, 2022. The certificate yields 3% interest compounded annually, but all interest is paid at maturity. At maturity (on Dec.
31, 2026), Salvador will receive $115,927. For tax purposes, what amount of the $15,927 income that Salvador receives in 2026 does Salvador need to recognize in 2022?
What amount of the $15,927 does Salvador need to recognize in 2023 and 2024?

 

4. Joe's Cross Fit, an accrual-method taxpayer, provides personal training services. On Nov. 30, 2020, Barbie pays Joe's Cross Fit $2,400 cash for 24 months of personal training services ($100/month). Barbie's training sessions beginning on December 1, 2020. For book purposes, Joe's Cross Fit will recognize $100 in income in 2020, $1,200 in 2021, and $1,100 in 2022. For tax purposes, how much of the $2,400 must Joe's Cross Fit include in gross income in 2020 if Joe's elects to defer prepaid income to the maximum extent possible? For tax purposes, how much of the $2,400 must Joe's Cross Fit include in gross income in 2021
and 2022? How much of the $2,400 would Joe's Cross Fit include in gross income in each of 2020, 2021, and 2022 if Joe's Cross Fit is a cash-method taxpayer?