Question & Answer

Assume TDW Corporation’s (calendar-year-end) has 2024 taxable income of $950,000 for purposes of computing the §179 expense. The company acquired the following assets during 2024:

Suppose you asked your favorite AI query tool “Under the timing strategy, does it make sense for a person to accelerate income recognition when tax rates are increasing?” and the AI tool responded as follows:

Identify some of the advantages of surface-mount technology over conventional through-hole technology.

Briefly describe the plastic extrusion process.

Ida and Clem were married for several years, but in 2018 they finalized their divorce. In the divorce decree, Ida agreed to deed their car to Clem and pay Clem $10,000 per year for twenty years (but not beyond his death). Did these transfers qualify as alimony for tax purposes? Explain.

Explain how the Galleon Fund case led to stronger enforcement against insider trading. (LO4)

Stereolithography is to be used to build the part in Figure 33.1 in the text. Dimensions of the part are: height = 125 mm, outside diameter = 75 mm, inside diameter = 65 mm, handle diameter = 12 mm, handle distance from cup = 70 mm measured from center (axis) of cup to center of handle. The handle bars connecting the cup and handle at the top and bottom of the part have a rectangular cross section and are 10 mm thick and 12 mm wide. The thickness at the base of the cup is 10 mm. The laser beam diameter = 0.25 mm, and the beam can be moved across the surface of the photopolymer at = 500 mm/s. Layer thickness = 0.20 mm. Compute an estimate of the time required to build the part, if 10 s are lost each layer to lower the height of the platform that holds the part. Neglect post-curing time.

How are defined benefit plans different from defined contribution plans? How are they similar?

What is the difference between powder injection molding and metal injection molding?

Using the facts from the previous problem, when should Hank send the bill if he expects his marginal tax rate to be 33 percent next year? 25 percent next year?

Under what circumstances will a partner recognize a gain from an operating distribution?

According to research, have mutual funds outperformed the market? Explain. Would mutual funds be attractive to some investors even if they are not expected to outperform the market? Explain. (LO6)

Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000. Determine the amount Clyde should include in his gross income this year under the following circumstances:

Jimmy has fallen on hard times recently. Last year he borrowed $250,000 and added an additional $50,000 of his own funds to purchase $300,000 of undeveloped real estate. This year the value of the real estate dropped dramatically and Jimmy’s lender agreed to reduce the loan amount to $230,000. For each of the following independent situations, indicate the amount Jimmy must include in gross income and explain your answer:

What determines if a taxpayer is required to file a tax return?  If a taxpayer is not required to file a tax return, does this mean that the taxpayer should not file a tax return?

On the last day of its current tax year, Buy Rite LLC received $300,000 when it sold a machine it had purchased for $200,000 three years ago to use in its business. At the time of the sale, the basis in the equipment had been reduced to $100,000 due to tax depreciation taken. How much did the members’ self-employment earnings from Buy Rite increase when the equipment was sold? [Hint: See §1402(a)(3).]

For each of the following situations, indicate how much the taxpayer is required to include in gross income and explain your answer:

Although indifference curves will normally be bowed in toward the origin, on odd occasions they might not be. Which of the diagrams correspond to which of the following? Explain the shape of each curve. (a)  X and Y are left shoes and right shoes. (b)  X and Y are two brands of the same product, and the consumer cannot tell them apart. (c)  X is a good but Y is a ‘bad’ – like household refuse.

How is surface texture distinguished from surface integrity?

Relative to arm’s-length transactions, why do related-person transactions receive more IRS scrutiny?

Explain how and why the option premiums may change in response to a surprise announcement that the Fed will increase interest rates, even if stock prices are not affected. (LO2)

Halle just acquired a vacation home. She plans on spending several months each year vacationing in the home and renting out the property for the rest of the year. She is projecting tax losses on the rental portion of the property for the year. She is not too concerned about the losses because she is confident she will be able to use the losses to offset her income from other sources. Is her confidence misplaced? Explain.

Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1 $ 160,000 Purchases (gross) 640,000 Freight-in 30,000 Sales revenue 1,000,000 Sales returns 70,000 Purchase discounts 12,000 Instructions (a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales. (b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost.

Explain the use of call provisions on bonds. How can a call provision affect the price of a bond? (LO2)

Hughie, Dewey, and Louie are equal shareholders in HDL, an S corporation. HDL’s S election terminates under each of the following alternative scenarios. When is the earliest it can again operate as an S corporation?