RESEARCH & WRITTEN COMMUNICATION EXERCISES For questions 1-8, identify a relevant section of the Internal Revenue Code and write a brief answer. For questions 9-12, identify a relevant administrative regulation, ruling or court case. In your submission please be sure to include both the question and your answer. Each question is worth five points. Each student will receive a total score between 0 and 60. 1. Private G.I. George was a soldier during the invasion to Iraq in 2003. His salary was $2,800 per month. In 2003, he spent eight months in Iraq and four months in Florida as part of a planning team for the post-reconstruction efforts. How much of his salary is taxable in 2003? Veronica received as a gift, a painting from her sister. The painting had a fair market value of $20,000 and a basis to her sister of $5,000 at the date of the gift. How much income tax must Veronica pay as a result of receiving this gift? 3 Charles loaned his work colleague, David, $5,000 to pay for an emergency surgery. Unfortunately, two weeks later, David passed away from complications of the surgery, and consequenty, the debt was never repad. Can Chades daim any deduction? John and Carol are divorced and owned a house they acquired when they first got manied twenty-three years ago. Under the divorce degree that was finalized by the court in 2016, Carol pays John $2,000 per month alimony. Since the real estate market is appreciating at a double digit rate, John and Carol wish to hold on to their house for at least another few years to capitalize on the expected appreciation of the real estate. Since they are still friends, they decide to live in separate bedrooms until they sell the property next year. Is Carol entitled to claim a deduction for the alimony paid to John in 2020? 5. Dennis sold stock in Acme Widgets, a NYSE listed company, to Kurt for $30,000. His basis in the stock was $50,000, so he incurred a $20,000 capital loss. Kurtis Dennis brother-in-law (i e., Kurt is the husband of Dennis' sister). Is the loss subject to the related party loss disallowance rules? 6. Monica is a rancher. This year, her herd of cattle, having an adjusted basis of $90,000, was infested with a mad cow disease and had to be destroyed. Monica's insurance policy reimburses her $120,000. Monica uses the insurance proceeds to buy a new herd of cattle. What are the tax consequences of these transactions? a 7. Melanie owed Bruce $10,000. In payment of this debt Melanie transferred to Bruce a life insurance policy on Melanie, with a cash surrender value of $10,000. The face value of the policy is $250,000. Bruce names himself as the beneficiary of the policy and continues to make the premium payments. After Bruce has paid $15,000 in premiums, Melanie dies and Bruce collects $250,000. Is any of the $250,000 Bruce received includable in his taxable income? 8 Kiren is 55 years old and has an IRA with $160,000 in it. Her son, Randy, was accepted to Stanford Medical School. Kiren had not planned for this and needs to withdraw $40,000 per year out of her Individual Retirement Account (IRA") to help pay the tuition and fees at Stanford. What are the tax consequences to Kiren of the withdrawals from the IRA? 9 Nickel Inc is a corporation eligible to elect sub-chapter S treatment. Paul Smith was a shareholder in Nickel Inc. On March 1, 2017, Paul died before signing the proper S corporation election form. The stock passed to Paul's estate upon his death. Janice is appointed executor of Paul's estate on June 1, 2017 On April 7, 2017, Nickel Inc. filed Form 2553, the election form to be a sub-chapter S corporation properly signed by all shareholders owning shares on April 7, 2017, and Janice on behalf of Paul/Paul's estate. Is this the sub-chapter S election valid? 10. Glen Zucker is opening a new trendy restaurant in the Calabasas shopping center. He owns a self-directed Individual Retirement Account (IRA) and would like to liquidate stocks from his IRA and use up to $300,000 from his TRA account to have the IRA invest in the new restaurant business. What are the tax implications if an IRA invests in a partnership that owns and operates a restaurant? -2 Vicky Huff, a Manhattan Beach resident was not ready to file her tax returns by April 15, so she mailed a request for automatic extension for her tax return on April 15. She enclosed a check for $12,000 along with her extension request. The IRS cashed the check on April 27. She filed her tax return on May 17. The following month, the IRS assessed Vicky a late filing penalty of $3,200 because they daimed she did not mail the extension request on time. The IRS no longer has the original envelope containing the check and the extension request. Is it possible for Vicky to get her late filing penalties reversed? V Bob manied a sloppy woman. After several years of marriage in 2016, he was fed up of cleaning up the messes that his wife made in their house One morning, he found a crumpled Kleenex on the bathroom vanity. Believing that it was trash, he angrily flushed the crumpled Kleenex down the toilet. Unfortunately, the Kleenex was wrapped around his wife's engagementring, which she had removed that morning so that she could clean it when she returned from work that evening. The loss of the ring is not covered by insurance. Is the couple able to deduct a casualty loss for the loss of the ring