Question & Answer

A corporation commissioned an accounting firm to recalculate the way it accounted for leasing transactions.  With the new calculations, the corporation was able to file amended tax returns for the past few years that increased the corporation’s net operating loss carryover from $3,000,000 to $5,000,000. Was the corporation wise to pay the accountants for their work that led to the increase in the NOL carryover? What factors should be considered in making this determination?

Moran owns a building he bought during year 0 for $150,000. He sold the building in year 6. During the time he held the building, he depreciated it by $32,000. What are the amount and character of the gain or loss Moran will recognize on the sale in each of the following alternative situations?    a. Moran received $145,000.  b. Moran received $170,000. c. Moran received $110,000.

What are common book-tax differences relating to corporate charitable contributions?  Are these differences favorable or unfavorable?

How does a partner determine their basis in distributed assets when the partnership distributes other property in addition to money and hot assets?

Use the information presented in BE5-8 for Adams Company to prepare the long-term liabilities section of the balance sheet.

Restin Co. uses the gross method to record sales made on credit. On June 1, 2014, it made sales of $50,000 with terms 3/15, n/45. On June 12, 2014, Restin received full payment for the June 1 sale. Prepare the required journal entries for Restin Co.

Why do you think it is difficult for investors to assess the financial condition of a financial institution that has purchased a large amount of mortgage-backed securities? (LO5)

Robert and Keisha invited Bijan to join them in forming Aero, a plane-chartering company, as a corporation. Bijan did not want to join at the time and declined their invitation. More than a year later, Bijan changed his mind and transferred appreciated property to Aero in exchange for 45 percent of Aero stock. Is Bijan required to recognize his realized gain on the transaction?

Breslin Inc. made a capital contribution of investment property to its 100 percent-owned subsidiary, Crisler Company. The investment property had a fair market value of $3,000,000 and a tax basis to Breslin of $2,225,000.

Explain how bank regulation can be more effective when there is consolidation of banks and securities firms. (LO2)

Jorge and Anita, married taxpayers, earn $150,000 in taxable income and $40,000 in interest from an investment in City of Heflin bonds.  Using the U.S. tax rate schedule for married filing jointly, how much federal tax will they owe?  What is their average tax rate?  What is their effective tax rate?  What is their current marginal tax rate?

{Planning} Jackie has a corporate client that has recently received a 30-day notice from the IRS with a $100,000 tax assessment.  Her client is considering requesting an appeals conference to contest the assessment.  What factors should Jackie advise her client to consider before requesting an appeals conference?

In 2024, SML Corp. reported taxable income of $100,000 before any NOL deductions. SML has a $170,000 NOL carryover that originated in 2017 and a $90,000 NOL carryover that originated in 2023. What is SML’s 2024 taxable income after the NOL deduction? What NOLs can SML carryover to 2025?

Identify some of the non-machine tool applications of numerical control.

What is a clean room and explain the classification system by which clean rooms are rated?

Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC).  WC owns 15 percent of the TC stock.  Compute WC’s deductible DRD in each of the following situations:

Is it necessary that a trial balance be taken periodically? What purpose does it serve?

Explain why Congress sometimes mandates that businesses use specific accounting methods while other times Congress is content to require businesses to use the same accounting methods for tax purposes that they use for financial accounting purposes.

Presented below is summarized information for Johnston Co., which sells merchandise on the installment basis. 2014 2015 2016 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,000 163,800 182,000 Gross profi t $ 95,000 $ 96,200 $ 98,000 Collections from customers on: 2014 installment sales $ 75,000 $100,000 $ 50,000 2015 installment sales 100,000 120,000 2016 installment sales 100,000 Instructions (a) Compute the realized gross profit for each of the years 2014, 2015, and 2016. (b) Prepare all entries required in 2016, applying the installment-sales method of accounting. (Ignore interest charges.)

Last year, TBA Corporation, a calendar-year taxpayer, reported a tax liability of $100,000. TBA confidently anticipates a current-year tax liability of $240,000. Compute the minimum estimated tax payments TBA should make for the first, second, third, and fourth quarters respectively (ignore the annualized income method), assuming the following:

Apple Union (AU), a C corporation with a March 31 year-end, uses the accrual method of accounting.  If AU elects to be taxed as an S corporation, what will its year-end and method of accounting be (assuming no special elections)?

What is an end effector?

Last year, BTA Corporation, a calendar-year taxpayer, reported a net operating loss of $10,000 and a $0 tax liability.  BTA confidently anticipates a current-year tax liability of $240,000. Determine the minimum estimated tax payments BTA should make for the first, second, third, and fourth quarters respectively (ignore the annualized income method) assuming the following:

Last year, Cougar Corp. (CC) reported a net operating loss of $25,000. In the current year, CC expected its current-year tax liability to be $260,000, so it made four equal estimated tax payments of $65,000 each. Cougar closed its books at the end of each quarter.  The following schedule reports CC’s taxable income at the end of each quarter:         Quarter-End Cumulative taxable income First $300,000 Second $700,000 Third $1,000,000 Fourth $1,500,000   CC’s current year tax liability on $1,500,000 of taxable income is $315,000.  Does CC owe underpayment penalties on its estimated tax payments?  If so, for which quarters does it owe the penalty?

A screen with 10 mesh count has wires with a diameter of 0.0213 in. Determine (a) the maximum particle size that will pass through the wire mesh and (b) the proportion of open space in the screen.