CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 3, Problem 53P
To determine
Explain the manner in which the facts might lead to different taxable income.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Your friend Edgar has just finished his first yearworking full-time, and comes home beamingwith an envelope from the IRS, which has senthim a check for $650 after he sent in his tax forms.Explain to Edgar why this does not mean that hedidn’t pay taxes.
Tim receives a $25,000 gift from his parents for a down payment on a house. They know he cannot buy a house without their help. They write “gift” in the memo line of the check. How much of the gift is taxable to Tim?
In your response, please make sure to take all of the facts above into consideration. You can refer back to the text, lecture videos, and the IRS website. Please make sure to support whatever conclusion you decide to present.
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.
Chapter 3 Solutions
CONCEPTS IN FED.TAX.,2020-W/ACCESS
Ch. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Prob. 13DQCh. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Prob. 20DQCh. 3 - Prob. 21DQCh. 3 - Are all losses realized on the sale of capital...Ch. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - Prob. 26DQCh. 3 - Prob. 27DQCh. 3 - Prob. 28DQCh. 3 - Prob. 29DQCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - How much taxable income should each of the...Ch. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Minnie owns a qualified annuity that cost 78,000....Ch. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Devi is the chief executive officer of Nishida...Ch. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Determine whether the taxpayer has income that is...Ch. 3 - Prob. 64PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Prob. 69PCh. 3 - Prob. 70PCh. 3 - Prob. 71PCh. 3 - Prob. 72PCh. 3 - Prob. 73PCh. 3 - Prob. 74PCh. 3 - Prob. 75PCh. 3 - Prob. 76PCh. 3 - During the last five months of the year, Dwana...Ch. 3 - Prob. 78PCh. 3 - Prob. 79PCh. 3 - Prob. 80PCh. 3 - Prob. 81PCh. 3 - Lorene, Inc., owns an apartment complex. The terms...Ch. 3 - Prob. 83PCh. 3 - Prob. 84PCh. 3 - Prob. 85PCh. 3 - Prob. 86PCh. 3 - Prob. 87PCh. 3 - Prob. 88PCh. 3 - Prob. 89IIPCh. 3 - Prob. 90IIPCh. 3 - Prob. 91IIPCh. 3 - Prob. 92IIPCh. 3 - Prob. 93IIPCh. 3 - Prob. 94IIPCh. 3 - Prob. 95IIPCh. 3 - Prob. 96IIPCh. 3 - Prob. 97IIPCh. 3 - Prob. 105DCCh. 3 - Kerry is employed as a ticket vendor at an...Ch. 3 - Prob. 107DCCh. 3 - Prob. 108DCCh. 3 - Prob. 109EDC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Darrell is an employee of Whitneys. During the current year, Darrells salary is 136,000. Whitneys net self-employment income is also 136,000. Calculate the Social Security and self-employment taxes paid by Darrell and Whitney. Write a letter to Whitney in which you state how much she will have to pay in Social Security and self-employment taxes and why she owes those amounts.arrow_forwardNote: This problem is for the 2019 tax year. Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon did not engage in any virtual currency transactions during the year, and he does not want $3 to go to the Presidential Election Campaign Fund. Devon's wife, Ariane, passed away in 2015. Devon's son, Tom, who is age 18, resides with Devon. Tom's Social Security number is 123-45-6788. Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory; the business operates as Devon’s Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2019 are as follows. Sales revenue $740,000 Cost of goods sold (based on purchases for the year) 405,000 Salary expense 88,000 Rent expense 30,000 Utilities 8,000 Telephone 6,500 Advertising 4,000 Bad debts 5,000 Depreciation* 21,000 Health insurance**…arrow_forwardYour 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.arrow_forward
- Alex, age 24, had an HSA account set up with her employer, Target, that had $5,000 in the account at the end of the year. She then quit her job in July and withdrew the funds. She had no qualifying medical expenses during 2022. Instead, she used the funds from the HSA to buy a used car she had wanted for a while. What is the tax consequence of this action? Group of answer choices Nothing. Taxpayers are allowed to withdraw from their HSA accounts at any time. Her withdraw is prohibited and will result in a forfeiture of the funds. Alex must pay income tax and a 6% penalty on the withdrawal. Alex must pay income tax and a 20% penalty on the withdrawal.arrow_forwardPLEASE HELP ME UNDERSTAND AND USE THE INFORMATION PROVIDED WITH THE FOLLOWING THANK YOU! IT WILL NOT MAKE SENSE TO ME IF INFORMATION IS USED FROM A DIFFERENT QUESTION. Lillian and Jackson Clark are married in their early 20s living in Los Angeles. Jackson Clark earned $93,000 in 2018 from his sales job. During the year, his employer withheld $11,685 for income tax purposes. In addition, the Clarks received interest of $350 on a joint savings account, $750 interest on tax-exempt municipal bonds, and dividends of $400 on common stocks. At the end of 2018, the Clarks sold two stocks, A and B. Stock A was sold for $700 and purchased four months earlier for $800. Stock B was sold for $1,500 and bought 3 years earlier for $1,100. Although his company's pension plan covers Jackson, he plans to contribute $5,500 to a traditional deductible IRA for 2018. In addition, their only child, Carter, age 2, received (as his sole source of income) dividends of $200 from Hershey's stock. PLEASE EXPLAIN…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT