You are more likely to hire a plumber to repair a leaky drainpipe if the tax rate on your earned income rises. you already own the specialized tools required to complete the plumbing repair work. the opportunity cost of your time is high. you possess knowledge and experience in plumbing repair work. the transaction cost of entering into a plumbing contract increases because of government regulations.

You are more likely to hire a plumber to repair a leaky drainpipe if the tax rate on your earned income rises. you already own the specialized tools required to complete the plumbing repair work. the opportunity cost of your time is high. you possess knowledge and experience in plumbing repair work. the transaction cost of entering into a plumbing contract increases because of government regulations.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter11: Individuals As Employees And Proprietors

Section: Chapter Questions

Problem 18P

See similar textbooks

Similar questions

You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment? What method of accounting would you use for this construction project and why? What would be the benefits and challenges with your method selection? Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors). What might be some benefits and challenges associated with the other method of construction revenue recognition?
1. You operate a small car yard which sells cars. Which of the following could you claim a GST input tax credit for?a. Repayments on a loan contract for the building premises. b. Council fees paid to the local council on your owned building premises. c. Costs of getting your windows cleaned once a month paid to someone as wages. d. Insurance premiums paid on the building.
Like 99% of other sane taxpayers, you, a self-employed CPA, elect the standard mileage rate ($0.58 per mile for 2019, $0.575 per mile for 2020) for deducting the cost of your business-related excursions from your home office, not that crazy “actual cost method” that would have you keeping every single receipt for every single car-related expense. But, in addition to gas, you incur the following costs on your trips to see clients (etc.) – tolls, parking, interest on car loan, repairs, insurance, and speeding tickets. Which, if any, of these expenses can you deduct in addition to the standard mileage rate, and why?
Which of the following taxpayers may not use the standard mileage method of calculating transportation costs? a.A self-employed CPA who drives a computer-equipped minivan to visit clients. b.An attorney who uses his Tesla for calling on clients. c.A taxpayer who has a fleet of 10 business automobiles. d.A real estate salesperson who drives a $70,000 Mercedes while showing houses. e.All of these taxpayers may use the standard mileage method.
Many small businesses have to squeeze down costs any way they can just to survive. One way many businesses do this is by hiring workers as independent contractors rather than as regular employees. Unlike rules for regular employees, a business does not have to pay social security (FICA) taxes and unemployment insurance payments for independent contractors. Similarly, it does not have to withhold federal, state, or local income taxes or the employee’s share of FICA taxes. The IRS has a 20-factor test determining whether a worker should be considered an employee or a contractor, but many businesses ignore those rules or interpret them loosely in their favor. When workers are treated as independent contractors, they do not get a W-2 form at tax time (they geta 1099 instead), they do not have any income taxes withheld, and they find themselves subject to self-employment taxes, by which they bear the brunt of both the employees and the employer’s share of FICA taxes. Requirements…
1) Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime premium per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2) A small nearby upholstering company has offered to upholster furniture for Portsmouth at a fixed charge of $51 per hour. The management of Portsmouth is confident that this upholstering company’s work is high quality and their craftsmen can work as quickly as Portsmouth’s own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?
LaMont works for a company in downtown Chicago. The firm encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $270 per month. a. If LaMont receives one pass (worth $270) each month, how much of this benefit must he include in his gross income each year? b. If the company provides each employee with $270 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?
LaMont works for a company in downtown Chicago. The company encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $285 per month. Required: If LaMont receives one pass (worth $285) each month, how much of this benefit must he include in his gross income each year? If the company provides each employee with $285 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?
Fred is considering three job offers in advertising. A full-time position as a coordinator that pays a salary of $40,000 per year. A full-time position as a designer that pays an hourly wage of $28. The job assumes five 8-hour days per week. A sales representative that pays a 5% commission. Sales reps typically sell an average of $100,000 per month in advertising. The following are the specifics about the benefits of the job opportunities: The U.S. government will deduct Social Security (6.2%) and Medicare (1.45%). Fred will deduct 15% of Gross Income to cover Federal Income Tax. Fred does not live in a state with State Income Tax. Fred is planning on taking two weeks of vacation and has typically been sick 3 days per year. The Coordinator job includes two weeks of paid vacation and five paid sick days per year, paid health insurance, life insurance costing $35 per month, and a fully paid retirement plan. The Designer job includes five paid vacation days and three paid sick days…
Fred is considering three job offers in advertising. A full-time position as a coordinator that pays a salary of $40,000 per year. A full-time position as a designer that pays an hourly wage of $28. The job assumes five 8-hour days per week. A sales representative that pays a 5% commission. Sales reps typically sell an average of $100,000 per month in advertising. The following are the specifics about the benefits of the job opportunities: The U.S. government will deduct Social Security (6.2%) and Medicare (1.45%). Fred will deduct 15% of Gross Income to cover Federal Income Tax. Fred does not live in a state with State Income Tax. Fred is planning on taking two weeks of vacation and has typically been sick 3 days per year. The Coordinator job includes two weeks of paid vacation and five paid sick days per year, paid health insurance, life insurance costing $35 per month, and a fully paid retirement plan. The Designer job includes five paid vacation days and three paid sick days…
Fred is considering three job offers in advertising. A full-time position as a coordinator that pays a salary of $40,000 per year. A full-time position as a designer that pays an hourly wage of $28. The job assumes five 8-hour days per week. A sales representative that pays a 5% commission. Sales reps typically sell an average of $100,000 per month in advertising. The following are the specifics about the benefits of the job opportunities: The U.S. government will deduct Social Security (6.2%) and Medicare (1.45%). Fred will deduct 15% of Gross Income to cover Federal Income Tax. Fred does not live in a state with State Income Tax. Fred is planning on taking two weeks of vacation and has typically been sick 3 days per year. The Coordinator job includes two weeks of paid vacation and five paid sick days per year, paid health insurance, life insurance costing $35 per month, and a fully paid retirement plan. The Designer job includes five paid vacation days and three paid sick days…
Edward Foster is a building contractor. He and his customer have agreed that he will submit a bill to them when he is 25 percent complete, 50 percent complete, 75 percent complete, and 100 percent complete. For example, he has a $300,000 room addition. When he has completed 25 percent, he will bill his customer $25,000. The problem occurs when he is 40 percent complete and has incurred expenses but cannot bill his customer.