EBK CONCEPTS IN FEDERAL TAXATION 2019
EBK CONCEPTS IN FEDERAL TAXATION 2019
26th Edition
ISBN: 9781337671774
Author: Murphy
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 2, Problem 62P

a.

To determine

Ascertain the propriety of allowing Person D a deduction for warranty costs in the current year if Person D is a cash basis taxpayer.

b.

To determine

Ascertain the propriety of allowing Person D a deduction for warranty costs in the current year if Person D is a cash basis taxpayer.

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Blackburn Corporation is a calendar year taxpayer. Every year on September 1, Blackburn enters into a contract with Smith Company for Smith to provide cleanup and winterization services for its grounds and buildings. The amount paid on September 1 when the contract is signed is $7,500 and the contract runs from December of the same year through March of the following year. When may Blackburn deduct the amount paid on September 1, 2020?
Faisal has insured his vehicle with AXA insurance company. Throughout the year he experiences a loss in January costing 1,577, another in May costing 1,284 and the last in December costing 1,102. If Faisal has an aggregate deductible of 2,574. How much will the insurer pay?
The following is an example of a recurring expense which is deductible by a calendar-year taxpayer in full in the year of payment: (a.) The taxpayer purchases six months of business insurance on September 15, 2016 for a cost of $800. (b.) The taxpayer pays $10,000 for two years of rent for the office building in advance. (c.) Taxpayer pays a consultant $15,000 to perform a marketing study that will not be completed for 18 months. (d.) Taxpayer pays his attorney a retainer fee of $10,000 for ongoing litigation costs in a product liability lawsuit
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Understanding U.S. Taxes; Author: Bechtel International Center/Stanford University;https://www.youtube.com/watch?v=QFrw0y08Oto;License: Standard Youtube License