The bank then declared the whole obligation due, and proceeded to deduct the amount of one million pesos (P1,000,000.00) from Sarah’s deposit after notice to her that this is a form of compensation allowed by law. Is the bank correct?
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- T borrows $100,000 from the bank in Year 1, which he agrees to repay in Year 2. Whenthe debt becomes due in Year 2, the bank agrees to release T from liability if hepays $80,000.a. T realizes $100,000 of income in Year 1.b. T realizes $20,000 of income from the cancellation of debt in Year 2.c. T realizes $20,000 of ordinary income as compensation for services in Year 2 ifthe cancellation of debt was intended to satisfy the bank’s obligation to pay Tfor services.d. Both a and b.e. Either b or c, depending on the circumstances. T buys a parcel of real estate for $100,000, which he finances by giving the seller a nonrecoursemortgage for the full purchase price. The debt is due in one balloon payment inYear 5. When the debt becomes due in Year 5, T decides to give the property back to theseller in satisfaction of the debt (the property is worth only $50,000 at that time).a. T will realize $100,000 of income in Year 1 because the debt was non-recourse.b. T will realize no income in Year…During 2020, Jackie sent her brother Junnie $2,500 via a telegraphic transfer through El Banco Prieto. The bank’s remittance clerk made a mistake and credited Junnie with $250,000 which he promptly withdrew. The bank demanded the return of the mistakenly credited excess, but Junnie refused to do so. The BIR entered the picture and investigated Junnie. Would the BIR be correct if it determines that he earned a taxable income under the facts? No, it was not her fault that the funds in excess of $2,500 were credited to him. Yes, income is a taxable income regardless of the source No, he had no income because he had no right to the mistakenly credited funds. No, the funds in excess of $2,500 were in effect donated to her.Betty borrowed $200,000 at an interest rate of 10% p.a. from XYZ bank to purchase the goodwill, premises, equipment and stock of a cookware shop. As security for the loan, she was required to mortgage her holiday home. Please discuss, with reference to case authority, whether the purchase of the goodwill, premises, equipment and stock would be deductible?
- Your client was the beneficiary of an annuity contract purchased by her stepmother. When the stepmother died, the insurance company paid the client $400,000 and sent her a Form 1099 indicating that the taxable portion (i.e., the amount in excess of the investment in the contract) was $50,000. However, according to the client, her father fraudulently convinced her that he was the intended beneficiary. She gave her father a check equal to the amount she had received from the insurance company. She did not report any of the annuity proceeds in her income tax return. She later discovered the fraud and filed a lawsuit to collect from her father. The IRS has examined your client’s return and has taken the position that she must include the $50,000 in her gross income. Evaluate the IRS’s position.State whether the following provisions impair or preclude negotiability, the instrument in each instance being otherwise in proper form. Answer each statement with either the word “Negotiable” or “Nonnegotiable” and explain why.a. A note for $2,000 payable in twenty monthly installments of $100 each that provides the following: “In case of death of maker, all payments not due at date of death are canceled.”b. A note stating “This note is secured by a mortgage on personal property located at 351 Maple Street, Smithton, Illinois.”c. A certificate of deposit reciting “June 6, 2014, John Jones has deposited in the Citizens Bank of Emanon, Illinois, Two Thousand Dollars, to the credit of himself, payable upon the return of this instrument properly indorsed, with interest at the rate of 6 percent per annum from date of issue upon ninety days’ written notice. (Signed) Jill Crystal, President, Citizens Bank of Emanon.”d. An instrument reciting “I.O.U., Mark Noble, $1,000.00.”e. A note stating…Lorissa owes Waterbury State Bank $200,000. During the current year, she isunable to make the required payments on the loan and negotiates the followingterms to extinguish the debt. Lorissa transfers to Waterbury ownership ofinvestment property with a value of $90,000 and a basis of $55,000, and commonstock with a value of $50,000 and a basis of $70,000. Lorissa also pays Waterbury$5,000 cash, and Waterbury forgives the remaining amount of debt. Before theagreement, Lorissa's assets are $290,000, and her liabilities are $440,000.Determine how much gross income Lorissa has from the extinguishment of the debt.
- Lokalalo knows that not all their customers will pay so they take out insurance for that purpose. The insurance does not cover them for their full loss unfortunately. Lokalalo pays for the insurance in advance, which gives them 12 months of cover. Lokalalo paid $15,000 on 1 August 2020 for cover for the next 12 months. What happens in the balance sheet, income statement and statement of cash flows on the date of the transaction when the $15,000 is paid?Pat invites Tin to join him in his business. Tin agreed that the following adjustments are taken up in the books of Pat: Prepaid expenses of P 10,000 and accrued expenses of P6,000 are to be recognized. Allowance for doubtful accounts on Pat's accounts receivable shall be increased by P10,000. Pat's capital before adjustment for the above items was P405,000. Tin will invest enough cash to make her equal to 60%. How much should Tin invest to give her a 60% equity or capital of the firm?On January 1, 1999, A signs a promissory note and binds himself to pay X P100,000 plus 15% per annum interest on June 30, 1999. Before June 30, 1999, X can demand payment IF on June 30, 1999, A is paying X, X can refuse the payment Because the period is for the benefit of the debtor, A can compel the creditor X to accept payment any date before June 30, 1999. Because the period is for the benefit of the debtor and the creditor, X can refuse any rendered payment before June 30, 1999.
- Robert received a note with a face value of P 40,000 as a fee for the services she rendered to the client. The note is a non – interest bearing and is payable within a year. The prevailing market rate of the note is 10%. The present value factor of 10% annuity of P 1 is .909. What is the amount of income to be reported upon receipt of the note? At the end of the taxable year?Albert, the managing director of Albert's Vehicle Parts, guaranteed a bank loan of $750,00 for Josh his employee. Josh left the Island unexpectedly owing the bank $150,000 which Albert had to pa Discuss whether Albert can claim this as an allowable deduction fro the accounts of Albert's Vehicle Parts? Would your answer be differen Albert's Vehicle Parts had lent Josh the money and had forgiven Josh the debt before he left?Shine received a promissory note of Php. 90,000, representing payment for her services as a legal officer, from Shiners Company payable after two years. COMPUTE Shine's GROSS COMPENSATION INCOME UNDER THE FOLLOWING SITUATION: The note is interest-bearing with an interest rate of 12%.