Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year's resolution, Jack decided he would finally do it. Jack put his business plan together and, on January 1 of this year, Jack opened his doors for business as a C corporation called Geo-Jack ( the following financial information for the year (assume GJ reports on a calendar year and uses the accrual method of accountingl GJ). Jack is the sole shareholder. Jack reported a. In January, GJ rented a small business office about 12 miles from Jack's home. GJ paid $10,000, which represented a damage deposit of $4,000 and rent for two years ($3,000 annually) b. GJ earned and collected $290,000 performing geological-related services and selling its specialized digging tool c. GJ received $50 interest from municipal bonds and $2.100 interest from other investments d. GJ purchased some new equipment in February for $42.500. It claimed depreciation on these assets during the year in the amount of $6,540 e. GJ paid $7,000 to buy luxury season tickets for Jack's parents for State U football games t GJ paid Jack's father $10,000 for services that would have cost no more than $6,000 if Jack had hired any other local business to perform the services. While Jack's dad was competent, he does not command such a premium from his other clients g. In an attempt to get his name and new business recognized, GJ paid $7.000 for a one-page ad in the Geologic Survey. It also paid $15,000 in radio ads to be run through the end of December h. GJ leased additional office space in a building downtown. GJ paid rent of $27,000 for the year i. In November, Jack's office was broken into and equipment valued at $5,000 was stolen. The tax basis of the equipment was $5,500. Jack received $2,000 of insurance proceeds from the theft j. GJ incurred a $4,000 fine from the state government for digging in an unauthorized digging zone k. GJ contributed $3,000 to lobbyists for ther he in persuading the state government to authonze certain unauthorized digging l. On July 1, GJ paid $1800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of this year through December 31 of next year. m. GJ borrowed $20,000 to help with the company's initial funding needs. GJ used $2.000 of funds to invest in municipal bonds. A the end of the year, GJ paid the $1,200 of interest expense that accrued on the loan during the year n. Jack lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6,280 miles between the office and his home. He also drove an additional 7.200 mles between the office and traveling to client sites. Jack did not use the truck for any other purposes. He did not keep track of the specific expenses associated with the truck. However, while traveling to a client site, Jack received a $150 speeding ticket. GJ reimbursed Jack for business mileage and for the speeding ticket o. GJ purchased two season tickets (20 games) to attend State U baseball games for a total of $1,100. Jack took existing and prospective clients to the games to maintain contact and find further work. This was very successful for Jack as GJ gained many new projects through substantial discussions with the clients folowing the games p. GJ reimbursed employee-salespersons $3,500 for meals involving substantial business discussion q. GJ had a client who needed Jack to perform work in Florida. Because Jack had never been to Florida before, he booked an extra Prev 1 of 2 Next > 888 ra 3 4 a. In January, GJ rented a small business office about 12 miles from Jack's home. GJ paid $10,000, which represented a damage deposit of $4,000 and rent for two years($3,000 annually). b. GJ earned and collected $290,000 performing geological-related services and selling its specialized digging tool c. GJ received $50 interest from municipal bonds and $2500 interest from other investments. d. GJ purchased some new equipment in February for $42,500. lt claimed depreciation on these assets during the year in the amount e. GJ paid $7000 to buy luxury season tickets for Jack's parents for State U football games. f. GJ paid Jack's father $10,000 for services that would have cost no more than $6,000 if Jack had hired any other local business to perform the services. While Jack's dad was competent, he does not command such a premium from his other clients. g ln an attempt to get his name and new business recognized, GJ paid $7000 for a one-page ad in the Geologic Survey. it also paid 15,000 jin radio ads to be run through the end of December GJ leased additional office space in a building downtown. GJ paid rent of $27,000 for the year h. i In November, Jack's office was broken into and equipment valued at $5,000 was stolen. The tax basis of the equipment was $5,500. Jack received $2,000 of insurance proceeds from the theft j GJ incurred a $4,000 fine from the state government for digging in an unauthorized digging zone. k. GJ contributed $3,000 to lobbyists for their help in persuading the state government to authorize certain unauthorized digging L On July 1, GJ paid $1,800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of this year through December 31 of next year m. GJ borrowed $20,000 to help with the company's initial funding needs. GJ used $2.000 of funds to invest in municipal bonds. At n. Jack lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6.280 miles between the office and his the end of the year, GJ paid the $1,200 of interest expense that accrued on the loan during the year home. He also drove an additional 7,200 miles between the office and traveling to client sites. Jack did not use the truck for any other purposes. He did not keep track of the specific expenses associated with the truck. However, while traveling to a client site, Jack received a $150 speeding ticket GJ reimbursed Jack for business mileage and for the speeding ticket o. GJ purchased two season tickets (20 games) to attend State U baseball games for a total of $t,100. Jack took existing and prospective clients to the games to maintain contact and find further work. This was very successful for Jack as GJ gained many new projects through substantial discussions with the clients following the games p. GJ reimbursed employee-salespersons $3.500 for meals involving substantial business discussion g GJ had a client who needed Jack to perform work in Florida. Because Jack had never been to Florida before, he booked an extra day and night for sightseeing Jack spent $400 for airfare and booked a hotel for three nights ($120igho Jack stayed two days for business purposes and one day for personal purposes) He also rented a car for $45 per day The client arranged for Jack's meals while Jack was doing business. GJ reimbursed Jack for all expenses lar 2 HI Next > 7 5 8 a. What amount will increase taxable income (positive) or reduce taxable income (negative) for each of the above scenarios? s b. As a C corporation, does GJ have a required tax year? If so, what would it be? c. If GJ were a sole proprietorship, would it have a required tax year-end? If so, what would it be? d. If GJ were an S corporation, would it have a required tax year-end? if so, what would it be? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D emount will increase taxable income (positive) or reduce taxablie income (negative) for each of the above scenarios? (Negative amounts should be indicated by a mirus sign. Enter zero for no effect on taxable income.) rev t of 2 Next > 898 3 5 9 Required ARequired B Required C Required D amount will increase taxable income (positive) or reduce taxable income (negative) for each of the above scenarios? (Negative amounts should be indicated by a minus sign. Enter zero for no effect on taxable income.) Prev of 2EE Next > 3 5 9 Required: a. What amount will increase taxable income (positive) or reduce taxable income (negative) for each of the above scenarios? b. As a C corporation, does GJ have a required tax year? If so, what would it be? c. If GJ were a sole proprietorship, would it have a required tax year-end? Ifso, what would it be? d. If GJ were an S corporation, would it have a required tax year-end? If so, what would it be? Complete this question by entering your answers in the tabs below Required A Required B Required C Reumed D As a C corporation, does G) have a required tax year? If so, what would it be? b As a C corporation, does GJ have a required tax year? b-1. If so, what would t be? C Required A Required C Prev 1of2 Next > 6 8 a. What amount will increase taxable income (positive) or reduce taxable income (negative) for each of the above scenarios? b. As a C corporation, does GJ have a required tax year? If so, what would it be? c. If GJ were a sole proprietorship, would it have a required tax year-end? If so, what would it be? d. If GJ were an S corporation, would it have a required tax year-end? If so, what would it be? Complete this question by entering your answers in the tabs below Required A Required BRequired CRequired D If GJ were a sole proprietorship, would it have a required tax year-end? If so, what would it be? e HGJ were a sole proprielonship, would it have a required tax year end? 1.so what would be? C Required Required D> Prev 1 of 2 Next > 30 s Required: a. What amount will increase taxable income (positive) or reduce taxable income (negative) for each of the above scenarios? b. As a C corporation, does GJ have a required tax year? If so, what would it be? c. If GJ were a sole proprietorship, would it have a required tax year-end? If so, what would it be? d. If GJ were an S corporation, would it have a required tax year-end? If so, what would it be? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Ir G) were an S corporation, would it have a required tax year-end? If so, what would it be? WXd it have a reg ed tax yearend? d-1. H so, what would t be? C Required Prev1 of 2 Next >