Question & Answer

Salazar Inc., a Colorado company, is relocating to a nearby town. It would like to trade its real property for some real property in the new location. While Salazar has found several prospective buyers for its real property and has also located several properties that are acceptable in the new location, it cannot find anyone willing to trade Salazar Inc. for its property in a like-kind exchange. Explain how a third-party intermediary could facilitate Salazar’s like-kind exchange.

Using the data in BE3-3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue.

How does an entity choose its tax year? Is it the same process no matter the type of tax year-end the taxpayer adopts?

Armelio operates a business that acts as a sales representative for a client that produces and sells precious metals to electronic manufacturers. Armelio contacts manufacturers and convinces them to sign contracts for delivery of metals, and his company earns a commission on the sales. This year, Armelio contacted a jeweler to engrave small lapel buttons for his client’s employees. Armelio paid $20 each for the lapel buttons, and the jeweler charged Armelio an additional $7 for engraving. Can Armelio deduct the cost of the lapel buttons as business gifts? (Hint: see §274(b) and Reg. §1.274-3.)

Buckley, an individual, began a business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since they began the business. In the current year, Buckley sold the following business assets:  Asset Original Cost Accumulated Depreciation Gain/Loss Computers $6,000 $2,000 ($3,000) Machinery 10,000 4,000 (2,000) Furniture 20,000 12,000 7,000  Building 100,000 10,000 (1,000)

Assume you asked your favorite AI learning tool “Would a taxpayer classify a car used for business as a capital asset for tax purposes?” and the AI tool responded as follows:

This year, Santhosh, a single taxpayer, estimates that his tax liability will be $100,000.  Last year, his total tax liability was $15,000.  He estimates that his tax withholding from his employer will be $35,000.  Is Santhosh required to increase his withholding or make estimated tax payments this year to avoid the underpayment penalty?  If so, how much?

An extruder has a diameter of 5.0 in and a length to diameter ratio of 26. The barrel heats the polypropylene melt to 450°F, which provides a melt viscosity of 0.0025 lb-s/in2 . The pitch of the screw is 4.2 in and the channel depth is 0.15 in. In operation the screw rotates at 50 rev/min and a head pressure of 450 lb/in2 is generated. What is the volume flow rate of polypropylene from the die at the end of the barrel?

What does the degree of polymerization indicate?

What are the most common legal entities used for operating a business? How are these entities treated similarly and differently for state law purposes?

Compare and contrast the FICA tax burden of S corporation shareholder-employees and LLC members (assume the LLC is taxed as a partnership) receiving compensation for working for the entity (guaranteed payments) and business income allocations to S corporation shareholders and LLC members assuming the owners are actively involved in the entity’s business activities. How does your analysis change if the owners are not actively involved in the entity’s business activities?

How would you set about assessing whether or not a country had made a net dynamic gain by joining a customs union? What sort of evidence would you look for?

Generally accepted accounting principles usually require the use of accrual accounting to “fairly present” income. If the cash receipts and disbursements method of accounting will “clearly reflect” taxable income, why does this method not usually also “fairly present” income?

Ray Albertson is 72 years old and lives by himself in an apartment in Salt Lake City. Ray’s gross income for the year is $3,000. Ray’s support is provided as follows: himself (9 percent), his daughters Diane (20 percent) and Karen (15 percent), his sons Mike (20 percent) and Kenneth (10 percent), his friend Milt (14 percent), and his cousin Henry (12 percent).

Kiyara (single) is a 50 percent shareholder of Guardian Corporation (an S Corporation). Kiyara does not do any work for Guardian Corp. Guardian Corp. reported $300,000 of business income for the year. Before considering her business income allocation from Guardian Corp. and the self-employment tax deduction (if any), Kiyara’s adjusted gross income was $250,000 (all employee salary). Kiyara has $40,000 in itemized deductions. Answer the following questions for Kiyara. a. What is Kiyara’s self-employment tax liability? b. Assuming the income allocated to Kiyara is qualified business income, what is Kiyara’s deduction for qualified business income? Assume Kiyara’s share of wages paid by Guardian Corp. is $50,000 and her share in the unadjusted basis of qualified property used by Guardian was $200,000.  c. What is Kiyara’s net investment income tax liability (assume no investment expenses)? d. What is Kiyara’s additional Medicare tax liability (include all earned income in computing the tax)?

1. If 4x exchange for 3m what are the terms of trade? 2. If the terms of trade are 3, how many units of the imported good could I buy for the money earned by the sale of 1 unit of the exported good? What is the exchange ratio?

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $100,000 of business income from WCC for the year. Jacob’s marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax (Jacob has salary in excess of the wage base limitation) and .9 percent additional Medicare tax.    a. What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income?  b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?

Outline the accounting procedures involved in applying the operating lease method by a lessee.

The two axes of an x-y positioning table are each driven by a stepping motor connected to a leadscrew with a 4:1 gear reduction. The number of step angles on each stepping motor is 200. Each leadscrew has a pitch = 5.0 mm and provides an axis range = 400.0 mm. There are 16 bits in each binary register used by the controller to store position data for the two axes. (a) What is the controlresolution of each axis? (b) What are the required rotational speeds and corresponding pulse train frequencies of each stepping motor in order to drive the table at 600 mm/min in a straight line from point (25,25) to point (300,150)? Ignore acceleration.

Identify and explain the major steps involved in preparing the statement of cash flows.

Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks. The home office is 300 square feet, and the entire house is 4,500 square feet. Brooke incurred the following home-related expenses during the year. Brooke itemizes her deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Unless indicated otherwise, assume Brooke uses the actual expense method to compute home office expenses.

Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss. Answer the following questions associated with each of the following alternative scenarios:

Mustafa, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mustafa is contributing $200,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $200,000 and a tax basis of $150,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain or income is each owner required to recognize under each of the following alterative situations? [Hint: Look at §§351 and 721.] a. MMT is formed as a C corporation. b. MMT is formed as an S corporation. c. MMT is formed as an LLC (taxed as a partnership).

A sand core located inside a mold cavity has a volume of 157.0 in3 . It is used in the casting of a cast iron pump housing. Determine the buoyancy force that will tend to lift the core during pouring.

Describe the book-tax differences that arise from nonqualified stock options.