John Rivera, age 31, is single and has no dependents. At the beginning of 2022, John started

Question:

John Rivera, age 31, is single and has no dependents. At the beginning of 2022, John started his own excavation business and named it Earth Movers. John lives at 1045 Center Street, Lindon, UT, and his business is located at 381 State Street, Lindon, UT. The Zip Code for both addresses is 84042. John’s Social Security number is 111-11-1111, and the business identification number is 11-1111111. John is a cash basis taxpayer.

During 2022, John reports the following items in connection with his business.Fee income for services rendered Building rental expense Office furniture and equipment rental expense Office

During 2022, John recorded the following additional items.Interest income from First National Bank Dividends from ExxonMobil Quarterly estimated tax payments $10,000

John wants to maximize his cost recovery deductions (including taking any § 179 expense and any available additional first-year depreciation).

On October 8, 2022, John inherited IBM stock from his Aunt Mildred. John had been her favorite nephew. According to the data provided by the executor of Aunt Mildred’s estate, the stock was valued for estate tax purposes at $110,000. John is considering selling the IBM stock for $125,000 on December 29, 2022, and using $75,000 of the proceeds to purchase an Acura ZDX. He would use the car 100% for business. John wants to know what effect these transactions would have on his 2022 adjusted gross income.

Write a letter to John in which you present your calculations. Ignore any Federal self-employment tax implications.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

South Western Federal Taxation 2023 Comprehensive Volume

ISBN: 9780357719688

46th Edition

Authors: Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young

Question Posted: