I need someone to help me solve these tax problems and show their work by labeling each step or by explaining how they got the answer.

Chapter 1 37. Terry is a worker in the country Pretoria. His salary is $46,000 and his taxable income is $52,000. Pretoria imposes a Worker Tax as follows: Employers withhold a tax of 20% of all wages and salaries. If taxable income as reported on the employee's income tax return is greater than $50,000, an additional 10% tax is withheld on all income. Terry's marginal tax rate is: a. 0% b. 10% c. 20% d. 30% ANSWER: d 38. The mythical country of Januvia imposes a tax based on the number of titanium coins each taxpayer owns at the end of each year per the following schedule: Number of titanium coins Tax 0 - 200 $500 + $5 per titanium coin 201 - 500 $1,000 + $6 per titanium coin > 500 $4,000 + $7 per titanium coin Marvin, a resident of Januvia, owns 300 titanium coins at the end of the current year. I. Marvin's titanium coins tax is $2,800. II. Marvin's marginal tax rate is $6. III. Marvin's average tax rate is $9.33. IV. Marvin's average tax rate is $6. a. Statements II and III are correct. b. Statements I, II, and IV are correct. c. Statements II and IV are correct. d. Statements I, II and III are correct. e. Only statement II is correct. Chapter 2 52. Joanne, a single individual, has $2,000 in state taxes withheld from her salary in 2015. Her total itemized deductions are $6,150. She claims the $2,000 as an itemized deduction on her 2015 tax return. In 2016 she receives a state income tax refund of $700. Under the tax benefit rule she has to report income in 2016 of a. $2,000 b. $ 700. c. $ 50. d. $ -0-. e. $ -0-, but Joanne must file an amended 2015 tax and reduce her itemized deductions by $700. 53. Margarita, a single individual, has $2,000 in state taxes withheld from her salary in 2014. Her total itemized deductions are $7,500. She claims the $2,000 as an itemized deduction on her 2014 tax return. In 2015, she receives a state income tax refund of $400. Under the tax benefit rule she has to report income in 2015 of a. $2,000. b. $ 400. c. $ 200. [Type here] Chapter 1 d. $ -0-. e. $ -0-, but Margarita must file an amended 2014 tax and reduce her itemized deductions by $400. 101. Laurie's Lawn Service, Inc., purchases a heavy-duty tri-cut lawn mower on March 17, 2015, for $5,500. Under a special election, Laurie's expenses the $5,500 cost of the lawn mower in 2015. In July, a tire on the lawn mower is repaired at a cost of $450. Maintenance costs on the lawn mower for 2015 total $175. What is Laurie's basis in the lawn mower at the end of 2015? a. $- 0 b. $450 c. $5,500 d. $5,950 e. $6,125 102. Monica's Lawn Service, Inc., purchases a heavy-duty tri-cut lawn mower on March 17, 2015, for $4,500. The depreciation on the lawn mower in 2015 was $500. In July, a tire on the lawn mower is repaired at a cost of $650. Maintenance costs on the lawn mower for 2015 total $175. What is Monica's basis in the lawn mower at the end of 2015? a. $650 b. $4,000 c. $4,650 d. $5,150 e. $5,325 103. Monterey Developers purchases 10 acres of land for $15,000 on January 14, 2015. They also pay $2,000 in legal and other fees related to the purchase. Monterey spends $3,000 for legal fees, permit licenses, and city franchise fees to subdivide the land into 10 one-acre plots. Sewer and utility line easements cost an additional $5,000. Interest paid on the loan that financed the purchase is $1,200 for 2015. Monterey also pays $800 in property taxes in 2015. What is Monterey's adjusted basis in the land at the end of 2015? a. $17,000 b. $25,000 c. $25,800 d. $26,200 e. $27,000 104. James purchased land costing $22,000 in 2014. He paid $2,000 in legal fees and other expenses to complete the purchase. In 2015, James spends $24,000 subdividing the land and running utilities to the property. Interest paid on the loan used to finance the purchase and subdividing total $1,750 in 2014 and $3,200 in 2015. James paid $350 of property taxes in 2014 and $750 of property taxes in 2015. What is James's basis in the land at the end of 2015? a. $24,000 b. $46,000 c. $48,000 d. $50,950 e. $52,050 105. Drew Corporation purchased machinery costing $825,000 in 2014. Drew paid $5,000 for installation and testing of the machinery. Under a special election, Drew expensed $500,000 of the cost of the machinery in 2014. Drew also [Type here] Chapter 1 deducted depreciation on the machinery of $46,443 in 2014 and $79,593 in 2015. Drew's repair and maintenance costs on the machinery were $10,200 in 2014 and $13,300 in 2015. What is Drew Corporation's adjusted basis in the machinery at the end of 2015? a. $175,468 b. $198,964 c. $203,964 d. $325,000 e. $698,964 Chapter 3 31. Penny, age 45, purchased an annuity contract that cost $45,000. The contract will pay Penny $600 per month for 10 years after she reaches age 62. During the current year, Penny turns 62 and receives 4 payments under the contract. Penny's taxable income from the annuity payments is: a. $900 b. $1,500 c. $1,708 d. $2,250 e. $2,400 32. Penelope purchased an annuity contract that cost $45,000. The contract will pay Penelope $600 per month for 10 years after she reaches the age of 62. During the current year, Penelope turns 62 and receives 4 payments under the contract. The amount Penelope may exclude from taxable income as a return of capital on this years payments is: a. $692 b. $900 c. $1,500 d. $2,250 e. $2,400 38. Jerry purchased an annuity contract at the beginning of 2003 for $144,000. The contract specified that he and his wife would receive $1,000 per month for life. Jerry receives his first payment on February 1, 2015 when he is 59 years old and his wife is 56 years old. What amount of gross income should Jerry and his wife report on their 2015 income tax return from this annuity contract? a. $-0b. $4,400 c. $6,600 d. $11,000 40. Roberta invests $16,000 for a 10% interest in Bowie Partnership. In the first year of operations, Bowie reports net income from operations of $80,000 and distributes $6,000 cash to Roberta. How much gross income must Roberta recognize from her investment in Bowie? a. $2,000 b. $6,000 c. $8,000 d. $80,000 [Type here] Chapter 1 43. Nora, a single individual age 60, receives a gold watch worth $700 during her retirement luncheon, based upon her long tenure with the company. How much of the award must Nora recognize in her gross income for the current year? a. $- 0 b. $300 c. $400 d. $500 e. $700 49. Ona is a retired schoolteacher who receives a pension of $800 per month (Ona made no payments into the pension plan) and $2,000 of Social Security benefits per month. Ona's adjusted gross income is: a. $9,600 b. $13,900 c. $21,900 d. $24,000 e. $33,600 50. Rae is a retired corporate executive. He and his wife, Pat, receive pensions totaling $82,000 and $8,000 of Social Security benefits during the current year. Rae and Pat's adjusted gross income is a. $82,000 b. $86,000 c. $87,400 d. $88,800 e. $90,000 51. Binney is a retired auto mechanic. He and his wife, Jennie, receive taxable pensions totaling $35,000, $8,000 of taxexempt interest income and $6,000 of Social Security benefits during the current year. Assuming that they had no other items of income or deductions for adjusted gross income, Binney and Jennie's adjusted gross income is: a. $35,000 b. $36,700 c. $38,000 d. $39,700 e. $40,100 52. Lyle and Louise are retired living on income from their investments and Social Security benefits. During the current year, they receive the following: Cash dividends on stock investments $28,000 Interest on municipal bonds 5,000 Social Security benefits 18,000 Lyle and Louise's adjusted gross income is: a. $28,000 b. $33,000 c. $37,000 d. $48,000 e. $41,300 [Type here] Chapter 1 53. Marvin and Simone are a retired couple living on income from their investments and Social Security benefits. During the current year, they receive the following: Consulting fee from Burton Industries $35,000 Interest on municipal bonds 7,000 Social Security benefits 20,000 Marvin and Simone's adjusted gross income is: a. $45,000 b. $47,800 c. $52,000 d. $55,000 e. $61,000 54. Hector and Nicole are retired. During the current year, they receive $11,000 from a qualified pension plan, $3,000 of dividends on common stock holdings, $6,000 of tax-exempt interest, and $10,000 of Social Security benefits. Hector and Nicole's adjusted gross income is: a. $14,000 b. $19,000 c. $24,000 d. $30,000 55. Marvin and Stacy are retired. During the current year, they receive $10,000 in Social Security benefits. They have $45,000 of other taxable gross income and receive $23,000 of municipal bond interest. The taxable portion of the $10,000 Social Security payment is: a. $-0b. $5,000 c. $8,500 d. $10,000 56. Nellie, a single individual age 77, receives Social Security benefits of $7,000 during the current year. Her only other income consists of $5,000 of interest from bank CDs and $1,000 of tax exempt interest distributed from a trust fund. Nellie's gross income is: a. $- 0 b. $5,000 c. $8,500 d. $12,000 e. $13,000 62. As a result of their divorce this year, Carlos made the following payments to Michelle, his former wife: He transferred the family car to Michelle. The car cost them $20,000 and was worth $10,000 at the time that he gave it to Michelle. Carlos paid Michelle 12 monthly cash payments of $1,000 each. These payments are to continue as long as Michelle lives or until their son is age 19. When their son attains age 19, the payments will be reduced to $600 a month. On June 6, Carlos paid Michelle a single cash payment of $70,000 to help her settle in a new home. Carlos kept the family home. How much gross income should Michelle report as a result of the above transfers? [Type here] Chapter 1 a. $7,200 b. $12,000 c. $17,200 d. $87,200 e. $92,000 67. How much gross income does Faith have from the following items of economic income? Received cash gift of $6,000 from parents. Received $12,000 in alimony payments from former spouse. Received $18,000 in child support payments from former spouse. Won $6,000 in a slot machine in Las Vegas. Faith's vacation home on Lake Tahoe increased in value by $15,000. Collected $14,000 in unemployment benefits. a. $18,000 b. $30,000 c. $32,000 d. $38,000 e. $50,000 68. How much gross income does Ron have from the following items of economic income? Received cash gift of $5,000 from parents. Received $12,000 in alimony payments and $6,000 in child support from former spouse. Won $4,000 in Indiana lottery scratch off game. Investment in IBM stock increased in value by $15,000. Collected $12,000 in unemployment benefits. a. $16,000 b. $28,000 c. $33,000 d. $34,000 e. $54,000 92. Nora receives a salary of $55,000 during the current year. She sells some land that she held as an investment at a loss of $15,000 and some stock at a gain of $10,000. Nora's adjusted gross income is: a. $50,000 b. $52,000 c. $55,000 d. $62,000 e. $65,000 95. Boris, a single individual, has two sales of stock during the current year. The first sale produces a short-term loss of $27,000 and the second sale results in a long-term gain of $57,000. Boris's taxable income without considering the gain is $125,000. Boris's stock transactions will increase his taxable income by: a. $-0b. $30,000 c. $34,000 d. $54,000 [Type here] Chapter 1 96. Chip, a single individual has two sales of stock during the current year. The first sale produces a short-term loss of $10,000 and the second sale results in a long-term gain of $40,000. Chip's taxable income without considering the gain is $150,000. Chip's stock transactions will increase his income tax liability by: a. $3,200 b. $4,500 c. $6,000 d. $8,000 e. $8,400 98.Anna receives a salary of $42,000 during the current year. She sells some land that she held as an investment at a loss of $7,000 and some stock at a gain of $11,000. Anna's adjusted gross income is: a. $42,000 b. $46,000 c. $50,000 d. $53,000 125. Southview Construction Company enters into a contract to build a 30 mile cross country ski trail for $36,000 in the current year. Southview estimates the cost of building the trail to be $12,000. During the first year, Southview completes 10 miles of trail at a cost of $5,000. Southview receives $13,000 in advanced payments on the contract price in the first year. How much gross income must Southview recognize from the construction project in the first year? a. $- 0 b. $5,000 c. $12,000 d. $13,000 e. $15,000 Chapter 4 16. On April 1, Sally is given $20,000 worth of City of Boise bonds for her 18th birthday. On June 30, Sally receives the $800 annual interest payment on the bonds. How much income should Sally recognize due to these two events? a. $- 0 b. $200 c. $800 d. $20,000 e. $20,800 17. On April 1, Sally is given $20,000 worth of General Motors bonds for her 18th birthday. On June 30, Sally receives the $800 annual interest payment on the bonds. How much income should Sally recognize due to these two events? a. $- 0 b. $200 c. $800 d. $20,000 e. $20,800 [Type here] Chapter 1 18. On her 18th birthday, Anna's grandfather gave her stock worth $100,000. During the current year, Anna receives $5,000 of dividends on the stock, which she uses to pay college expenses. The cost of Anna's tuition, fees, and books is $4,000. Anna's income from this event is: a. $- 0 b. $1,000 c. $4,000 d. $5,000 e. $75,000 19. On her 18th birthday, Patti's grandfather gave her $8,000 of dividends on stock he owned, which she uses to pay college expenses. The cost of Patti's tuition, fees, and books is $6,000. Patti's gross income from this event is: a. $- 0 b. $2,000 c. $6,000 d. $8,000 24. Drew graduated from business school in December 2014. To honor Drew, on January 3, 2015, his uncle gives him two tickets to the Super Bowl. The uncle paid $1,200 for each ticket. Because he had to report to work at a brokerage firm in Indianapolis on January 15, 2016, he could not use the tickets. Therefore, he sells them for $2,500 each. How much income must Drew recognize in 2015 because of these events? a. $- 0 b. $2,000 c. $2,400 d. $2,600 e. $5,000 25. Ward and June are in the 28% tax bracket. Included in their assets is a Dell Corporation bond with a face value of $10,000. The bond pays $1,000 a year in interest. Ward and June make a gift to their son, Wally (age 19) of the $1,000 in interest income. Wally is in the 10% tax bracket. What is Ward and June's tax liability related to the bond and the bond interest for the current year? a. $-0b. $100 c. $280 d. $1,000 e. $2,800 26. Ward and June are in the 28% tax bracket. Included in their assets is a Dell Corporation bond with a face value of $10,000. The bond pays $1,000 per year in interest. Ward and June gift the bond to their son, Wally (age 19), on January 1, 2015. Wally is in the 10% tax bracket. Wally's taxable income from the receipt of the bond and the bond interest in 2015 is a. $-0b. $1,000 c. $1,500 d. $10,000 [Type here] Chapter 1 e. $11,000 27. Ward and June are in the 28% tax bracket. Included in their assets is a Dell Computer Corporation bond with a face value of $10,000. The bond pays $1,000 a year in interest. Ward and June gift the bond to their son, Wally (age 19), on January 1, 2015. Wally is in the 15% tax bracket. The 2015 net tax savings for the family unit of Ward, June and Wally related to the transfer of the bond is a. $-0b. $130 c. $150 d. $280 29. Gary receives $40,000 worth of Quantro, Inc., common stock from the estate of his late grandmother. He receives a $100 cash dividend six months later. Before the end of the year, Gary sells the stock for $42,000. Due to these events, how much must Gary include in his gross income for the year? a. $-0b. $100 c. $2,000 d. $2,100 e. $42,100 30. During the current year, Eleanor receives land valued at $30,000 from the estate of her grandfather. Her grandfather's basis in the land was $8,000. Eleanor sells the land for $34,000 late in the year. Eleanor's gross income is: a. $- 0 b. $4,000 c. $8,000 d. $16,000 e. $26,000 32. Fran dies on January 14, 2015. Her spouse, Carl, is the beneficiary of a $100,000 life insurance policy. Carl elects to receive the proceeds in 10 equal installments of $11,000. In 2015, Carl receives $11,000. The amount included in Carl's 2015 gross income is a. $- 0 b. $1,000 c. $10,000 d. $11,000 e. $111,000 33. Barbara was the legal owner of a $100,000 life insurance policy on herself. Glenna is the stated beneficiary. Shortly before her death, Barbara transfers ownership of the policy to Glenna for $15,000. Glenna makes one premium payment in the amount of $1,000 before Barbara dies. Glenna subsequently receives the $100,000 life insurance proceeds. How much of the $100,000 is taxable to Glenna? a. $- 0 b. $15,000 c. $84,000 d. $85,000 [Type here] Chapter 1 e. $100,000 34. Jerry's wife dies in September. His wife had paid $20,000 of premiums on a $150,000 face value whole life insurance policy. Jerry elects to receive the life insurance policy proceeds in 20 annual installments of $10,000. Jerry receives his first $10,000 payment this year. How much of the payment should Jerry report as gross income? a. $- 0 b. $2,500 c. $5,000 d. $7,500 e. $10,000 39. Maria is on a "full ride" tennis scholarship at Western University. Her $12,500 scholarship covers tuition and books ($7,000) and room and board ($5,500). Maria's gross income is a. $- 0 b. $2,000 c. $5,500 d. $7,000 e. $12,500 40. Mei-Ling is a candidate for a master's degree in taxation from Western State University. During the current year she receives the following cash payments: State allocated tuition waiver scholarship $2,200 A Microsoft scholarship (for fees and books) 800 Check from her grandmother 1,700 Loan proceeds from the college financial aid office 2,500 Prize won from a "rub and scratch" lottery ticket 300 Loan from her roommate 100 Interest received from National Bank CD 400 How much must be included in Mei-Ling's gross income? a. $- 0b. $700 c. $1,500 d. $3,700 e. $8,000 41. Denise receives an academic scholarship to Pollytech College. Under the scholarship agreement, she receives tuition ($1,500), books ($400), and room and board ($5,000). How much of the scholarship is included in Denise's gross income? a. $- 0 b. $400 c. $1,500 d. $5,000 e. $6,900 42. Donna is a student at Eastern State University. She receives a $4,000 academic scholarship from the Silverman Foundation. She also has a $2,000 assistantship to grade and tutor for the Department of Economics. Tuition, books, fees, [Type here] Chapter 1 and supplies are $5,000. How much gross income must Donna recognize from the scholarship and assistantship? a. $- 0 b. $1,000 c. $2,000 d. $5,000 e. $6,000 43. Victor receives a $4,000 per year scholarship from Southern College. The college specifies that $2,500 is for tuition, books, supplies, and equipment for classes. The other $1,500 is for room and board. As part of the conditions of the scholarship, Victor must also work ten hours per week as a grader, for which he is paid $1,700 for the year. Of the total amount received, Victor will include in income: a. $1,500 b. $1,700 c. $2,500 d. $3,200 e. $5,700 [Type here]