Introduction:
The amount of wages and the amount of qualified property that will be allocated to J.
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- Alicia and Rafel are in the process of negotiating a divorce agreement to be finalized in 2019. They both worked during the marriage and contributed an equal amount to the marital assets. They own a home with a fair market value of 400,000 (cost of 300,000) that is subject to a mortgage of 250,000. They have lived in the home for 12 years. They also have investment assets with a cost of 160,000 and a fair market value of 410,000. Thus, the net worth of the couple is 560,000 (400,000 250,000 + 410,000). The holding period for the investments is longer than one year. Alicia would like to continue to live in the house. Therefore, she has proposed that she receive the residence subject to the mortgage, a net value of 150,000. In addition, she would receive 17,600 each year for the next 10 years, which has a present value (at 6% interest) of 130,000. Rafel would receive the investment assets. If Rafel accepts this plan, he must sell one-half of the investments so that he can purchase a home. Assume that you are counseling Alicia. Explain to Alicia whether the proposed agreement would be fair on an after-tax basis.arrow_forwardNell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2019. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement? a. In consideration for her one-half interest in their personal residence. Kirby will transfer to Nell stock with a value of 200,000 and 50,000 of cash. Kirbys cost of the stock was 150,000, and the value of the personal residence is 500,000. They purchased the residence three years ago for 300,000. b. Nell will receive 1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate. c. Nell is to have custody of their 12-year-old son. Bobby. She is to receive 1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only 300 per month for the remainder of her life.arrow_forward1. In 2020, Joanne invested $90,000 for a 20% interest in a partnership in which she is a material participant. The partnership reported losses of $340,000 in 2020 and $180,000 in 2021. Joanne’s share of the partnership losses was $68,000 in 2020 and $36,000 in 2021. How much of these losses can Joanne deduct on her tax return? $0 in 2020; $0 in 2021. $68,000 in 2020; $22,000 in 2021. $68,000 in 2020; $36,000 in 2021. $68,000 in 2020; $0 in 2021.arrow_forward
- In the year 2023, with the social security wage cap set at $160,200, Alex obtained a $100,000 income distribution from a partnership where Alex served as a general partner. This distribution represents Alex's sole income for that year. What amount of self-employment tax does Alex owe? Round the final figure to the nearest whole dollar. None of the choices is correct. $2,900 $15,300 O $14,130 $3,824arrow_forwardLuciana, a nonshareholder, purchases a condominium from her employer for $85,000. The fair market value of the condominium is $120,000. What is Luciana's basis in the condominium and the amount of any income as a result of this purchase? Luciana's basis in the condominium is $_____ and she reports $______as ____. .arrow_forwardPartner Z (a calendar-year, cash basis taxpayer) performs services for the XYZ partnership (a FYE 9/30, accrual basis taxpayer) in September, 2020. In return, Z is to get a guaranteed payment of $50,000. XYZ pays Z the guaranteed payment in January, 2021. What tax year is the payment deducted by XYZ? What tax year is the payment included in Z’s income?arrow_forward
- Nell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2023. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement? Question Content Area a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000. The transfer of is a nontaxable event. Nell's basis for the stock is $fill in the blank 633301f7907bfc5_2. Kirby's basis in the house is $fill in the blank 633301f7907bfc5_3. Question Content Area b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate. , the payments are neither included in Nell’s gross income nor…arrow_forwardThe SON Partnership earned ordinary income of $135,000 in 2021. The partnership has three equal partners, Seth, Oliver, and Nolan. Nolan, who is single, uses the standard deduction, and has other income of $19,000 (not connected with the partnership) in 2021. He receives a $31,000 distribution from the partnership during the year. What is Nolan's taxable income in 2021? (If an input field is not used, leave the input field(s) empty. Do not select a label or enter a zero. Assume that the partnership is not eligible for the QBI deduction.) (Click the icon to view the standard deduction amounts.) Adjusted gross income (AGI) Minus: Deductions from AGI: Nolan's taxable incomearrow_forwardBarry and Madison plan to marry in December 2019. Barry's salary is $60,000 and he owns his residence. His itemized deductions total $18,200. Madison's salary is $81,000. Her itemized deductions total only $8,400 as she does not own her residence. For purposes of this problem, assume 2020 tax rates and standard deductions are the same as 2019. Read the requirements. Requirement a. What will their 2019 tax be if they marry before year-end and file a joint return? Adjusted gross income $141,000 Minus: Itemized deductions (26,600) Taxable income $114,400 (Use the 2019 tax rate schedule for all tax calculations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) Barry and Madison's gross tax if they file a joint return is $16,885 . Requirement b. What will their combined 2019 taxes be if they delay the marriage until 2020? Compute the taxable…arrow_forward
- Sherry Lockey, who is single, has a new limited partnership investment in a commercial rental project in which she has no personal involvement. During 2021, her share of the partnership loss equals $15,000. Sherry also has a new rental house that she actively manages, and this activity generated a $9,000 loss for 2021. Sherry had no passive loss carryover from prior years. If Sherry's modified adjusted gross income before passive losses is $138,000, calculate the deduction amounts for Sherry's 2021 tax return using Form 8582 (page 1). If an amount box does not require an entry or the answer is zero, enter "0". Note: If required, use the minus sign to enter a "loss" as a negative number on the lines 1d, 3d, 4, and 16. However, per the instructions on the tax return, enter all numbers in Part II as positive amounts. Form 8582 Department of the Treasury Internal Revenue Service (99) Name(s) shown on return Sherry Lockey Part I 2021 Passive Activity Loss Caution: Complete Parts IV and V…arrow_forwardBarry and Madison plan to marry in December 2019. Barry's salary is $60,000 and he owns his residence. His itemized deductions total $18,200. Madison's salary is $81,000. Her itemized deductions total only $8,400 as she does not own her residence. For purposes of this problem, assume 2020 tax rates and standard deductions are the same as 2019. Read the requirements. Requirement a. What will their 2019 tax be if they marry before year-end and file a joint return? Adjusted gross income $141,000 Minus: Itemized deductions (26,600) Taxable income $114,400 (Use the 2019tax rate schedule for all tax calculations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) Barry and Madison's gross tax if they file a joint return is .arrow_forwardJessica is singe and owns Mountain Valley Tours as a sole proprietorship in 2020. During the year, Mountain Valley generates $110,000 of Qualified Business Income (QBI). Jessica’s Adjusted Gross Income for the year 2020 is $150,000. Jessica has no income from interest, dividends, or capital gains. What is Jessica’s QBI deduction for 2020? Group of answer choices $0. $22,000. $26,000. $33,000.arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT