Chapter 1, Problem 17DQ

Mario is engaged in a pharmaceutical business. One day, Mario unnecessarily bought from Dario a truckload of supplies and medicines to be sold in his pharmacy so that he could post the cost in his ledger as expense to reduce his tax liability. Is the contract of sale between Mario and Dario valid? Why or why not? 2. Joanna entered into a loan contract with Marie over Marie’s car where Joanna is the borrower and Marie is the lender. It was stated in the contract that the ownership will be transferred to Joanna. The title to the car was given to Joanna who registered the car in her name. Before the end date of the contract, Joanna expressed her intention to buy the car. But Marie refused to agree to Joanna’s intent. Was Marie correct in refusing to agree to Joanna’s intent? Why or why not? 3. Scott requested Jenny to work with the Bureau of Internal Revenue (BIR) in further reducing the tax liability of the company believing her to be an accountant. Meanwhile, Jenny took advantage of…

Alison receives a notice of property taxes that are due from the County tax collector. The taxes are for the property next door to Alison and were incorrectly sent to her address. Alison believed the tax bill was for her property and paid it before realizing the error. Can Alison recover the amount she paid in taxes from her neighbor? Why or why not.

Bernice is a sole proprietor who provides dog walking services to a number of neighborhood dog owners.  Ralph hired Bernice to walk his husky while he was out of town on December 16, 2019.  Bernice walks Ralph’s husky on December 16, 2019 and bills Ralph on the same day.  Bernice received payment from Ralph in the form of a check on January 2, 2020.  Which of the following is TRUE? Group of answer choices a)If Bernice is a cash basis taxpayer, she must claim the income on her 2019 tax return.   b)If Bernice is a cash basis taxpayer, she must claim the income when it was earned.   c)If Bernice is an accrual basis taxpayer, she must claim the income on her 2019 tax return.   d) Bernice is an accrual basis taxpayer and must claim the income when she received it (on her 2020 tax return).