WAR ( We Are Rich) has been in business since 1986. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR-Mr. Someday Woods (single). However, in early 2019, Jack Hack and Someday Woods played a round of golf and Jack, for the first time ever, actually beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2019 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Wood's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2014-2018 numbers do not reflect capital loss carryovers. 2016 $94,000 2017 $170,000 2018 $250,000 Ordinary taxable income Other items not included in ordinary taxable income: Net gain (loss) on disposition of $1231 assets Net long-term capital gain (loss) on disposition of capital assets 2014 2015 $ 4,000 $2,000 $ 3,000 10,000 $(15,000) $ 1,000 $ (6,000) $17,000) $ 17,000) In 2019, Mr. Woods had taxable income in the amount of $480,000 before considering the following events and transactions that transpired in 2019: a. On January 1, 2019, WAR purchased a plot of land for $100,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October 1, 2019, for $40,000. b. On August 17, 2019, WAR sold its golf testing machine, "Iron Byron" and replaced it with a new machine "Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $22.000 on February 5, 2015. At the time of sale, "Iron Byron" had an adjusted tax basis of $4,000. WAR sold "Iron Byron" for $25,000 c. In the months October through December 2019, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest invention-the three-dimple golf ball. Data on these assets are provided below: Placed in Service (or purchased) Sold Initial Accumulated Selling Basis Depreciation Price Asset Someday's black leather sofa (used in office) Someday's office chair Marketable securities Land held for investment Other investment property $ 540 3,000 4/4/18 3/1/17 2/1/16 7/1/18 11/30/17 10/16/19 11/8/19 12/1/19 11/29/19 10/15/19 $3,000 8,000 12,000 45.000 10,000 $ 2,900 4,000 20,000 48,000 8,000 O d. Finally, on May 7, 2019, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2007, for $190,000 ($170,000 for the building, $20,000 for the land). At the time of the sale, the accumulated depreciation on the building was $50,000. WAR sold the building with the land) for $300,000. The fair market value of the land at the time of sale was $45,000. (Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated by a minus sign.) Compute Mr. Woods's tax liability for the year. Ignore any net investment income tax for the year and assume the 20 percent qualified business income deduction is included in taxable income before these transactions.) Use Tax rate schedules Tax Liability: Tax on ordinary income Tax on 25% Gain Tax on 0/15/20% Gain (taxed at 20%) Total tax liability 2019 Tax Rate Schedules Individuals Schedule x Slugle Schedule 2 Head of Household The taxis Ir taxable income is Butbol ener: The tax is: If taxable income But not over is over S 0 $ 9,700 10% of taxable income S 0 S 13.550 10% of taxable income $ 0,700 S 39475 S 13.550 $ 52,850 5970 plus 12% of the excess over 59.700 $1,385 plus 12% of the excess over S13,850 $ 39,475 $ 52.850 S 34.200 S $4.20054.543 plus 22% of the excess over $39,475 56,065 plus 22% of the excess over S52.550 S $4,200 $160,725 $34.200 S160,700 S14,332 50 plus 24% of the excess over 4200 S12,962 plus 24% of the excess over 54.200 S160.725 5204.100 S160,700 5201,100 32.745 50 plus 324 of the excess over S160.725 $31.322 plus 32% of the excess over S160,700 5301,100 5510,300 S204,100 5510.300 546.628.50 plus 358 of the excess over S204,100 545.210 plus 356 of the excess over S204.100 5810300 510.300 S153.793 50 plus 375 of the excess over S510 300 $152.350 plus 375 of the excess over 5510,300 Schedule Y-L-Marleding Jolly or waiting Wower) Sedule Y 2 Married Filing Separately Itable come But not even Isover The taxis Ir taxable income is But no one The to 50 $ 19,00 10 of taxable income 5 0 $ 9,700 10 of taxable income 519.400 5 73.95051,940 plus 12 of 59.700 $ 39,475 5970 plus 12 of the excess over 59,700 519.400 5 71.950 59.006 plus 2 of 5 39475 54,543 plus 225 of 570.950 S165.400 5321.450 S 520.765 plus 2 on of S160725 S14352 50 plus S163 100 5321.450 S50 565.497 ps321 of S160,725 5204.100 32.743 S plus 325 of the scene 5321.450 S40250 1612350 3.257 paso SJ06, 175 Ops 20 of the 12.354.75 ps3 5612.330 2015 Required information [The following information applies to the questions displayed below.) WAR (We Are Rich) has been in business since 1986. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR-Mr. Someday Woods (single). However, in early 2019, Jack Hack and Someday Woods played a round of golf and Jack, for the first time ever, actually beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2019 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Wood's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2014-2018 numbers do not reflect capital loss carryovers. 2014 4,000 2015 $2,000 2016 $94,000 2017 $170,000 2018 $250,000 $ Ordinary taxable income Other items not included in ordinary taxable income: Net gain (los) on disposition of $1231 assets Net long-term capital gain (loss) on disposition of capital assets $ (6,000) $ 3,000 10,000 $(15,000) $1,000 $(7,000) $ (7,000) In 2019, Mr. Woods had taxable income in the amount of $480,000 before considering the following events and transactions that transpired in 2019: a. On January 1, 2019, WAR purchased a plot of land for $100,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October 1, 2019, for $40,000. On August 17, 2019, WAR sold its golf testing machine, "Iron Byron" and replaced it with a new machine Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $22,000 on February 5, 2015. At the time of sale, "Iron Byron" had an adjusted tax basis of $4,000. WAR sold "Iron Byron" for $25,000. c. In the months October through December 2019, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest invention-the three-dimple golf ball Data on these assets are provided below: Placed in Service (or purchased) Initial Accumulated Selling Basi Depreciation Price Sold Asset Someday's black leather sofa (used in office) Someday's office chair Marketable Securities Land held for investment Other investment property $ 540 3,000 4/4/18 3/1/17 2/1/16 7/1/18 11/30/17 10/16/19 11/8/19 12/1/19 11/29/19 10/15/19 $ 3,000 8,000 12,000 45,000 10,000 $ 2,900 4,000 20,000 48.000 8.000 0 d. Finally, on May 7, 2019, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2007, for $190,000 ($170,000 for the building, $20,000 for the land). At the time of the sale, the accumulated depreciation on the building was $50,000. WAR sold the building with the land) for $300,000. The fair market value of the land at the time of sole was $45,000. (Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated hva minine sinn Compute Mr. Woods's tax liability for the year. (Ignore any net investment income tax for the year and assume the 20 percent qualified business income deduction is included in taxable income before these transactions.) Use Tax rate schedules Tax Liability: Tax on ordinary income Tax on 25% Gain Tax on 0/15/20% Gain (taxed at 20%) Total tax liability $ lo 2019 Tax Rate Schedules Individuals Schedule x Single Schadez Head of If taxable income B olo The te If no one The taxis 3 9.700 105 of become $ 13550 10 bence S 9700 S475 SO S5250 S 5970 plus 125 of the s er 5.700 of SIJ.SSO $39.475 S 54.200 5 52.50 S54.200 54.543 plus 225 of the excess over 530475 56,065 plus 225 of the over 532.550 S 54100 S160725 S160700 514.352 50 plus 345 of the 554.200 S160,75 5204100 5204.100 1.322 plus 32% of 532.745 50 plus 325 of the over S160.725 SI6700 S204.100 10300 S46,625 50 plus 356 504100 10.00 S43.210 plus 355 5204.100 W0100 SS101 51000 $152.350 plus 37 of $153.798 50 plus 375 of the 5510.00 SIG300 Schedule Y-I Married Fileg Jolly er lag Sciedadey 2 Married ting Sepures Ir tarbie B ONES Thes It Butter Theta 519,400 10% of taxable income $ 9,700 10 of taxable income $ 19.00 500 of 5915 90 51.940 ps the esser of the 59.700 5 73.950 59,475 554.00 $9.06 plus 224 of the even 570.00 543 225 of the excess over 15 S16400 5321.450 525,765 plus 245 of S160725 SH 50 plus 245 $16.00 5321.450 S250 10.735 565.497 the se 5321450 S400.250 S612.350 JO13 Si, so plus 35% 593.237 plus 335 of the excess o 5164.700 1545 plus 375 5612150 536.173 WAR ( We Are Rich) has been in business since 1986. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR-Mr. Someday Woods (single). However, in early 2019, Jack Hack and Someday Woods played a round of golf and Jack, for the first time ever, actually beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2019 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Wood's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2014-2018 numbers do not reflect capital loss carryovers. 2016 $94,000 2017 $170,000 2018 $250,000 Ordinary taxable income Other items not included in ordinary taxable income: Net gain (loss) on disposition of $1231 assets Net long-term capital gain (loss) on disposition of capital assets 2014 2015 $ 4,000 $2,000 $ 3,000 10,000 $(15,000) $ 1,000 $ (6,000) $17,000) $ 17,000) In 2019, Mr. Woods had taxable income in the amount of $480,000 before considering the following events and transactions that transpired in 2019: a. On January 1, 2019, WAR purchased a plot of land for $100,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October 1, 2019, for $40,000. b. On August 17, 2019, WAR sold its golf testing machine, "Iron Byron" and replaced it with a new machine "Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $22.000 on February 5, 2015. At the time of sale, "Iron Byron" had an adjusted tax basis of $4,000. WAR sold "Iron Byron" for $25,000 c. In the months October through December 2019, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest invention-the three-dimple golf ball. Data on these assets are provided below: Placed in Service (or purchased) Sold Initial Accumulated Selling Basis Depreciation Price Asset Someday's black leather sofa (used in office) Someday's office chair Marketable securities Land held for investment Other investment property $ 540 3,000 4/4/18 3/1/17 2/1/16 7/1/18 11/30/17 10/16/19 11/8/19 12/1/19 11/29/19 10/15/19 $3,000 8,000 12,000 45.000 10,000 $ 2,900 4,000 20,000 48,000 8,000 O d. Finally, on May 7, 2019, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2007, for $190,000 ($170,000 for the building, $20,000 for the land). At the time of the sale, the accumulated depreciation on the building was $50,000. WAR sold the building with the land) for $300,000. The fair market value of the land at the time of sale was $45,000. (Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated by a minus sign.) Compute Mr. Woods's tax liability for the year. Ignore any net investment income tax for the year and assume the 20 percent qualified business income deduction is included in taxable income before these transactions.) Use Tax rate schedules Tax Liability: Tax on ordinary income Tax on 25% Gain Tax on 0/15/20% Gain (taxed at 20%) Total tax liability 2019 Tax Rate Schedules Individuals Schedule x Slugle Schedule 2 Head of Household The taxis Ir taxable income is Butbol ener: The tax is: If taxable income But not over is over S 0 $ 9,700 10% of taxable income S 0 S 13.550 10% of taxable income $ 0,700 S 39475 S 13.550 $ 52,850 5970 plus 12% of the excess over 59.700 $1,385 plus 12% of the excess over S13,850 $ 39,475 $ 52.850 S 34.200 S $4.20054.543 plus 22% of the excess over $39,475 56,065 plus 22% of the excess over S52.550 S $4,200 $160,725 $34.200 S160,700 S14,332 50 plus 24% of the excess over 4200 S12,962 plus 24% of the excess over 54.200 S160.725 5204.100 S160,700 5201,100 32.745 50 plus 324 of the excess over S160.725 $31.322 plus 32% of the excess over S160,700 5301,100 5510,300 S204,100 5510.300 546.628.50 plus 358 of the excess over S204,100 545.210 plus 356 of the excess over S204.100 5810300 510.300 S153.793 50 plus 375 of the excess over S510 300 $152.350 plus 375 of the excess over 5510,300 Schedule Y-L-Marleding Jolly or waiting Wower) Sedule Y 2 Married Filing Separately Itable come But not even Isover The taxis Ir taxable income is But no one The to 50 $ 19,00 10 of taxable income 5 0 $ 9,700 10 of taxable income 519.400 5 73.95051,940 plus 12 of 59.700 $ 39,475 5970 plus 12 of the excess over 59,700 519.400 5 71.950 59.006 plus 2 of 5 39475 54,543 plus 225 of 570.950 S165.400 5321.450 S 520.765 plus 2 on of S160725 S14352 50 plus S163 100 5321.450 S50 565.497 ps321 of S160,725 5204.100 32.743 S plus 325 of the scene 5321.450 S40250 1612350 3.257 paso SJ06, 175 Ops 20 of the 12.354.75 ps3 5612.330 2015 Required information [The following information applies to the questions displayed below.) WAR (We Are Rich) has been in business since 1986. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR-Mr. Someday Woods (single). However, in early 2019, Jack Hack and Someday Woods played a round of golf and Jack, for the first time ever, actually beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2019 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Wood's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2014-2018 numbers do not reflect capital loss carryovers. 2014 4,000 2015 $2,000 2016 $94,000 2017 $170,000 2018 $250,000 $ Ordinary taxable income Other items not included in ordinary taxable income: Net gain (los) on disposition of $1231 assets Net long-term capital gain (loss) on disposition of capital assets $ (6,000) $ 3,000 10,000 $(15,000) $1,000 $(7,000) $ (7,000) In 2019, Mr. Woods had taxable income in the amount of $480,000 before considering the following events and transactions that transpired in 2019: a. On January 1, 2019, WAR purchased a plot of land for $100,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October 1, 2019, for $40,000. On August 17, 2019, WAR sold its golf testing machine, "Iron Byron" and replaced it with a new machine Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $22,000 on February 5, 2015. At the time of sale, "Iron Byron" had an adjusted tax basis of $4,000. WAR sold "Iron Byron" for $25,000. c. In the months October through December 2019, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest invention-the three-dimple golf ball Data on these assets are provided below: Placed in Service (or purchased) Initial Accumulated Selling Basi Depreciation Price Sold Asset Someday's black leather sofa (used in office) Someday's office chair Marketable Securities Land held for investment Other investment property $ 540 3,000 4/4/18 3/1/17 2/1/16 7/1/18 11/30/17 10/16/19 11/8/19 12/1/19 11/29/19 10/15/19 $ 3,000 8,000 12,000 45,000 10,000 $ 2,900 4,000 20,000 48.000 8.000 0 d. Finally, on May 7, 2019, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2007, for $190,000 ($170,000 for the building, $20,000 for the land). At the time of the sale, the accumulated depreciation on the building was $50,000. WAR sold the building with the land) for $300,000. The fair market value of the land at the time of sole was $45,000. (Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated hva minine sinn Compute Mr. Woods's tax liability for the year. (Ignore any net investment income tax for the year and assume the 20 percent qualified business income deduction is included in taxable income before these transactions.) Use Tax rate schedules Tax Liability: Tax on ordinary income Tax on 25% Gain Tax on 0/15/20% Gain (taxed at 20%) Total tax liability $ lo 2019 Tax Rate Schedules Individuals Schedule x Single Schadez Head of If taxable income B olo The te If no one The taxis 3 9.700 105 of become $ 13550 10 bence S 9700 S475 SO S5250 S 5970 plus 125 of the s er 5.700 of SIJ.SSO $39.475 S 54.200 5 52.50 S54.200 54.543 plus 225 of the excess over 530475 56,065 plus 225 of the over 532.550 S 54100 S160725 S160700 514.352 50 plus 345 of the 554.200 S160,75 5204100 5204.100 1.322 plus 32% of 532.745 50 plus 325 of the over S160.725 SI6700 S204.100 10300 S46,625 50 plus 356 504100 10.00 S43.210 plus 355 5204.100 W0100 SS101 51000 $152.350 plus 37 of $153.798 50 plus 375 of the 5510.00 SIG300 Schedule Y-I Married Fileg Jolly er lag Sciedadey 2 Married ting Sepures Ir tarbie B ONES Thes It Butter Theta 519,400 10% of taxable income $ 9,700 10 of taxable income $ 19.00 500 of 5915 90 51.940 ps the esser of the 59.700 5 73.950 59,475 554.00 $9.06 plus 224 of the even 570.00 543 225 of the excess over 15 S16400 5321.450 525,765 plus 245 of S160725 SH 50 plus 245 $16.00 5321.450 S250 10.735 565.497 the se 5321450 S400.250 S612.350 JO13 Si, so plus 35% 593.237 plus 335 of the excess o 5164.700 1545 plus 375 5612150 536.173
