1. In 2015, Taxpayer sold machinery used in its business for its fair value of $100,000 to an unrelated party who agreed to pay $25,000 in 2020 plus $25,000 per year (plus adequate interest) in June of the next three years. The machinery had an initial basis of $70,000 and accumulated depreciation of $36,400 through the date of sale. What is the total gain Taxpayer must recognize in 2020 under the installment method.
2. Business taxpayer decided to acquire the assets of a competing enterprise. On 15 August 2020, Taxpayer acquired the competing business for $175,000 and allocated $30,000 of the purchase price to goodwill. Determine the amount of amortization expense Taxpayer may deduct with regard to the purchased goodwill in 2020.
3. In 2015, its initial year, Business Taxpayer incurred $53,750 in start-up costs. Determine the amount of start-up costs Taxpayer can immediately expense (not including amortization) in 2020.
4. Mario operates a business and uses the accrual method of accounting. During 2020, Mario hires his brother, Luigi, who is a cash method taxpayer, to provide accounting services to Mario's business, and Luigi completes all his work before year end. In December of 2020, Luigi bills Mario $2,500 for the accounting services but receives only $2,000 in payments from Mario. Determine the amount Mario may deduct in 2020 with regard to the accounting services provided by Luigi.
5. Taxpayer operates a trucking business using the accrual method and reports on a calendar year. This year, Taxpayer signed a $50,000 binding contract with complete Auto Repair. Under the contract, complete Auto Repair will provide Taxpayer with up to 2,000 hours of vehicle repairs at $30 per hour. This year, complete Auto Repair provided 200 hours of repair services and billed Taxpayer $6,000 for those services. At year-end, Taxpayer had not paid complete Auto Repair for the services. Determine the amount Taxpayer may deduct for the repair services this year. If none, enter 0.