Ali is a member of a family that consists of him, his father, his mother and his older brother. Each member of the family has his own mobile phone. Each mobile phone is on a post-paid plan, for which a monthly bill is received at the end of each month. The electricity, on the other hand, is provided to the entire house in general, with one bill is received at the end of each month. The father has recently received the electricity bill for the month. and wishes to do some analysis of electricity consumption. Assuming that the value of the electricity bill is calculated based on the number of kilowatts consumed with no subscription fees. In the above information, the cost of electricity to Ali is: a. An indirect mixed cost O b. A direct fixed cost С. An indirect fixed cost d. A direct, variable cost e. An indirect, variable cost
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- Hassad owns a rental house on Lake Tahoe. He uses a real estate firm to screen prospective renters, but he makes the final decision on all rentals. He also is responsible for setting the weekly rental price of the house. During the current year, the house rents for 1,500 per week. Hassad pays a commission of 150 and a cleaning fee of 75 for each week the property is rented. During the current year, he incurs the following additional expenses related to the property: a. What is the proper tax treatment if Hassad rents the house for only 1 week (7 days) and uses it 50 days for personal purposes? b. What is the proper tax treatment if Hassad rents the house for 8 weeks (56 days) and uses it 44 days for personal purposes? c. What is the proper tax treatment if Hassad rents the house for 25 weeks (175 days) and uses it 15 days for personal purposes?Ali is a member of a family that consists of him , his father , his mother and his older brother . Each member of the family has his own mobile phone . Each mobile phone is on a post -paid plan , for which a monthly bill is received at the end of each month . The electricity , on the other hand , is provided to the entire house in general , with one bill is received at the end of each month . The father has recently received the phone bill of Ali and wishes to do some analysis of the phone consumption . Assuming that the value of the phone bill is calculated based on the number of minutes consumed with no subscription fees . In the above information , the cost of the phone bill to Ali is : a. A direct variable cost b. An indirect variable cost A direct fixed cost d . An indirect fixed cost e .An indirect mixed costBradley has two college-age children, Clint, a freshman (his first year in college) at State University, and Abigail, a junior at Northwest University (her third year of college). Both Clint and Abigail are full-time students. Bradley is in graduate school. Clint’s expenses for the year are as follows: $3,200 tuition and $500 books and course materials. Abigail’s expenses for the year are as follows: $7,200 tuition, $1,200 books and course materials, and $4,500 room and board. Bradley paid $5,000 of tuition for graduate school and $600 for books. Bradley is married, files a joint tax return, claims both children as dependents, and has a combined AGI with his wife of $139,000 for 2020. Bradley has determined that the available education credits are more beneficial than the available deductions. Determine the following: A. Clint: Which credit should he take? Total eligible expenses: Show calculation of maximum credit allowed: B. Abigail: Which credit should she take?…
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- Carey and Pat were good friends and neighbors in an upscale neighborhood near several highly rated golf courses in Arizona. During the winter, both Carey and Pat decided to rent their homes (at a premium) to groups of golfers from the New York area who wanted to get out of the snow and enjoy sunshine and golf for a couple of weeks during the winter. While their homes were rented, Carey and Pat vacationed together in Cancun. In January 2020, Carey rented his home for 14 days and received $14,000 in rent. Pat also rented his home for the same 14 days and received $16,000 in rent. Near the end of the 14-day rental period, Pat got a call from the renters, who wanted to extend their stay for one day. Pat agreed to the extension and charged the group $2,000 for the extra day. When preparing his 2020 tax return, Pat discovered that taxpayers who rent their home for more than 14 days are required to report all of their rental income on their tax returns. Pat didn’t think it was fair that he…John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony of 6,000 per year to Katy and child support of 12,000. The 12,000 of child support covers 65% of Katys costs of rearing Kendra. Kendras Social Security number is 123-45-6789, and Katys is 123-45-6788. Johns mother, Sally, lived with him until her death in early September 2019. He incurred and paid medical expenses for her of 15,588 and other support payments of 11,000. Sallys only sources of income were 5,500 of interest income on certificates of deposit and 5,600 of Social Security benefits, which she spent on her medical expenses and on maintenance of Johns household. Sallys Social Security number was 123-45-6787. John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is 95,000. The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, 9,500 was withheld for Federal income taxes and 4,000 was withheld for state income taxes. In addition to his salary, Johns employer provides him with the following fringe benefits. Group term life insurance with a maturity value of 95,000; the cost of the premiums for the employer was 295. Group health insurance plan; Johns employer paid premiums of 5,800 for his coverage. The plan paid 2,600 for Johns medical expenses during the year. Upon the death of his aunt Josie in December 2018, John, her only recognized heir, inherited the following assets. Three months prior to her death, Josie gave John a mountain cabin. Her adjusted basis for the mountain cabin was 120,000, and the fair market value was 195,000. No gift taxes were paid. During the year, John reported the following transactions. On February 1, 2019, he sold for 45,000 Microsoft stock that he inherited from his father four years ago. His fathers adjusted basis was 49,000, and the fair market value at the date of the fathers death was 41,000. The car John inherited from Josie was destroyed in a wreck on October 1, 2019. He had loaned the car to Katy to use for a two-week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of 16,000, the fair market value of the car on October 1, 2019. On December 28, 2019, John sold the 300 acres of land to his brother, James, for its fair market value of 160,000. James planned on using the land for his dairy farm. Other sources of income for John are: Potential itemized deductions for John, in addition to items already mentioned, are: Part 1Tax Computation Compute Johns net tax payable or refund due for 2019. Part 2Tax Planning Assume that rather than selling the land to James, John is considering leasing it to him for 12,000 annually with the lease beginning on October 1, 2019. James would prepay the lease payments through December 31, 2019. Thereafter, he would make monthly lease payments at the beginning of each month. What effect would this have on Johns 2019 tax liability? What potential problem might John encounter? Write a letter to John in which you advise him of the tax consequences of leasing versus selling. Also prepare a memo addressing these issues for the tax files.