1. Bob and Dan both live in Kansas. They bought their wives $15,000 diamond earrings for Christmas. Bob paid sales tax on his purchase, but Dan did not. Explain how this might have happened. Is it possible that Dan may owe some kind of tax on his purchase? If yes, explain and describe how Dan will report and pay any tax he might owe. 2. Describe Congress's probable justification for the following aspects of tax law: a. A tax credit for child care for working parents b. Home mortgage interest deduction C. Fines and penalties are not deductible 3. Jeremiah has an assignment to write a research paper about the tax implications of selling land to related parties. Describe the various sources of tax guidance and comment on their relative authority. 4. Julio is a single man and is a citizen of the United States. He lives in Florida. He provides almost all the support to his mom, dad, and two aunts. Mom, Dad, and the two aunts are citizens and residents of Guatemala, but they are considering moving to Mexico. Would this affect Julio from a tax perspective? Explain. 5. Skip and Beverly have two children, and they (Skip and Beverly) got a divorce in 2018. During 2019, the kids lived with Skip, but Beverly provided nearly all of their support. Skip is your client. Advise him about how to determine who gets to claim the children as dependents for 2019 6. Dennis and Josephine have been married for 7 years, and have two children (ages 2 and 4) and 3 dogs. Dennis and Josephine decided that they can no longer remain married and will be filing for divorce early in 2020. Both Dennis and Josephine are employed and earn the same salary, which is enough money to live independently. They come to you for advice. Comment on the following ideas they had: a. Dennis will take the kids and Josephine will take the dogs. Neither will pay alimony, but Josephine will pay child support until the children reach age 18. The couple will sell their house. b. Josephine will take the kids and the dogs, Dennis will pay alimony until either he or Josephine pass away, or Josephine remarries. The couple will sell their house. C. Josephine will take the kids and the dogs, and Dennis will take the house and give Josephine the BestTech stock that they bought for $15,000 and is now worth $210,000. Would your answers be different if Dennis and Josephine were divorcing in 2017? Explain. 7. Blaine's home was destroyed by a tornado. He missed four days of work to clean up the mess from the storm. His employer paid him for those days anyway (about $700). When Blaine went to pick up his check, his boss gave him a card with a note inside from that said, "Blaine, we are all thinking of you at this difficult time. We took up a collection and would like to make this loving offer of $1,500 to help you with expenses." The note was signed by Blaine's boss and coworkers. Blaine spent $3,000 making repairs to his house. The area was not declared a disaster area. Explain the tax implications of these items to Blaine. 8. Becky and Emily were injured while working at an auto parts plant. Becky was injured so badly that she could not work for three months and received workers compensation of $12,000. Emily wasn't injured as badly, but she still couldn't easily go to work, and received $12,000 from an insurance policy she bought to cover her income in the event she couldn't work due to injury. Will they both have to report the same amount of taxable income from this event? 9. Please explain the following: "All income must be reported, and all deductions are disallowed unless specifically allowed in the code." 10. Please explain the difference between deductions for AGI and deductions from AGI. Provide examples. 11. Beulah has a cabin in the Superstition Mountains in Arizona. She purchased it in 1996 for $10,000. In 2019, when it had a fair market value of $110,000, a massive forest fire destroyed all the trees and killed wildlife all around the cabin. The cabin itself, however, was unharmed. The area was declared a Federal disaster area. After the fire, an appraiser set the fair market value of the cabin at $50,000. Explain the tax implications to Beulah of her loss in value of the cabin. 12. Explain the concept of 61244 stock. 13. Describe the difference between personal property and personal use property. 14. Shannon pays a handyman named Kevin for various small jobs at her house and farm. She wants to know if she should consider Kevin an employee or an independent contractor. For each of the following facts, tell whether indicates that he would be an employee or an independent contractor: a. Kevin works only at the farm, which is operated for profit b. Kevin sets his work schedule C. Kevin deducts all expenses related to his work for Shannon on Schedule C d. Shannon pays Kevin hourly, rather than by the job e. Kevin only works for Shannon and does not do the same kind of work for others f. Kevin provides his own tools and training 15. Carol is a realtor. During 2019, she bought a Lincoln Navigator that she estimates that she uses 80% for business. She comes to see you, her tax preparer, at the end of 2019 so you can help her estimate her tax liability and plan for 2020. She has kept detailed records of all her mileage both for business and personal. She has all the receipts from purchasing gas and from oil changes and other maintenance. She would like to know the best way to claim the expense from her automobile on her Schedule C for her realtor business. 1. Bob and Dan both live in Kansas. They bought their wives $15,000 diamond earrings for Christmas. Bob paid sales tax on his purchase, but Dan did not. Explain how this might have happened. Is it possible that Dan may owe some kind of tax on his purchase? If yes, explain and describe how Dan will report and pay any tax he might owe. 2. Describe Congress's probable justification for the following aspects of tax law: a. A tax credit for child care for working parents b. Home mortgage interest deduction C. Fines and penalties are not deductible 3. Jeremiah has an assignment to write a research paper about the tax implications of selling land to related parties. Describe the various sources of tax guidance and comment on their relative authority. 4. Julio is a single man and is a citizen of the United States. He lives in Florida. He provides almost all the support to his mom, dad, and two aunts. Mom, Dad, and the two aunts are citizens and residents of Guatemala, but they are considering moving to Mexico. Would this affect Julio from a tax perspective? Explain. 5. Skip and Beverly have two children, and they (Skip and Beverly) got a divorce in 2018. During 2019, the kids lived with Skip, but Beverly provided nearly all of their support. Skip is your client. Advise him about how to determine who gets to claim the children as dependents for 2019 6. Dennis and Josephine have been married for 7 years, and have two children (ages 2 and 4) and 3 dogs. Dennis and Josephine decided that they can no longer remain married and will be filing for divorce early in 2020. Both Dennis and Josephine are employed and earn the same salary, which is enough money to live independently. They come to you for advice. Comment on the following ideas they had: a. Dennis will take the kids and Josephine will take the dogs. Neither will pay alimony, but Josephine will pay child support until the children reach age 18. The couple will sell their house. b. Josephine will take the kids and the dogs, Dennis will pay alimony until either he or Josephine pass away, or Josephine remarries. The couple will sell their house. C. Josephine will take the kids and the dogs, and Dennis will take the house and give Josephine the BestTech stock that they bought for $15,000 and is now worth $210,000. Would your answers be different if Dennis and Josephine were divorcing in 2017? Explain. 7. Blaine's home was destroyed by a tornado. He missed four days of work to clean up the mess from the storm. His employer paid him for those days anyway (about $700). When Blaine went to pick up his check, his boss gave him a card with a note inside from that said, "Blaine, we are all thinking of you at this difficult time. We took up a collection and would like to make this loving offer of $1,500 to help you with expenses." The note was signed by Blaine's boss and coworkers. Blaine spent $3,000 making repairs to his house. The area was not declared a disaster area. Explain the tax implications of these items to Blaine. 8. Becky and Emily were injured while working at an auto parts plant. Becky was injured so badly that she could not work for three months and received workers compensation of $12,000. Emily wasn't injured as badly, but she still couldn't easily go to work, and received $12,000 from an insurance policy she bought to cover her income in the event she couldn't work due to injury. Will they both have to report the same amount of taxable income from this event? 9. Please explain the following: "All income must be reported, and all deductions are disallowed unless specifically allowed in the code." 10. Please explain the difference between deductions for AGI and deductions from AGI. Provide examples. 11. Beulah has a cabin in the Superstition Mountains in Arizona. She purchased it in 1996 for $10,000. In 2019, when it had a fair market value of $110,000, a massive forest fire destroyed all the trees and killed wildlife all around the cabin. The cabin itself, however, was unharmed. The area was declared a Federal disaster area. After the fire, an appraiser set the fair market value of the cabin at $50,000. Explain the tax implications to Beulah of her loss in value of the cabin. 12. Explain the concept of 61244 stock. 13. Describe the difference between personal property and personal use property. 14. Shannon pays a handyman named Kevin for various small jobs at her house and farm. She wants to know if she should consider Kevin an employee or an independent contractor. For each of the following facts, tell whether indicates that he would be an employee or an independent contractor: a. Kevin works only at the farm, which is operated for profit b. Kevin sets his work schedule C. Kevin deducts all expenses related to his work for Shannon on Schedule C d. Shannon pays Kevin hourly, rather than by the job e. Kevin only works for Shannon and does not do the same kind of work for others f. Kevin provides his own tools and training 15. Carol is a realtor. During 2019, she bought a Lincoln Navigator that she estimates that she uses 80% for business. She comes to see you, her tax preparer, at the end of 2019 so you can help her estimate her tax liability and plan for 2020. She has kept detailed records of all her mileage both for business and personal. She has all the receipts from purchasing gas and from oil changes and other maintenance. She would like to know the best way to claim the expense from her automobile on her Schedule C for her realtor business