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LO.2 Tim is the vice president of western operations for Maroon Oil Company and is stationed in San Francisco. He is required to live in an employer-owned home, which is three blocks from his company office. The company-provided home is equipped with high-speed internet access and several telephone lines. Tim receives telephone calls and e-mails that require immediate attention any time of day or night because the company’s business is spread all over the world. A full-time administrative assistant resides in the house to assist Tim with the urgent business matters. Tim often uses the home for entertaining customers, suppliers, and employees. The fair market value of comparable housing is $9,000 per month. Tim is also provided with free parking at his company’s office. The value of the parking is $355 per month. Calculate the amount associated with the company-provided housing and free parking that Tim must include in his gross income for 2019.
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Chapter 5 Solutions
Individual Income Taxes
- 3. Harriette is a salesperson who works for a prestigious and admired Fortune 500 company. About how often is Harriette likely to encounter ethical issues in her work? a) once or twice during her career b) approximately once a month c) almost every week d) on a daily basis 2. Doing business is almost impossible in extremely poor countries because a) there are too many natural disasters in the Philippines b) there are a few businesses in the Philippines c) the demands for bribes are endless d) the leaders of the country do not like businessarrow_forwardIn his own words, Daniel Jones was “The Dude.” With his waist-long dreadlocks, part-time rock band, and well-paid job managing a company’s online search directory—he seemed to have it all. Originally from Germany, Jones, now age 32, earned his doctorate and taught at the University of Munich before coming to the United States, where he started his career in computers. In 1996, Jones started working with the company as a director of operations for U.S.-Speech Engineering Service and Retrieval Technology—working on a new, closely guarded search engine tied to the company’s .net concept. The company allows employees to order an unlimited amount of software and hardware, at no cost, for business purposes. Between December 2001 and November 2002, Jones ordered or used his assistant and other employees (including a high school intern) to order nearly 1,700 pieces of software which had very low cost but were worth a lot on the street. He then resold them for reduced prices—reaping millions.…arrow_forwardHenri is the owner of the “Chez Henri” Restaurant. It is not a large restaurant (78 seats). For this reason, it does not have many people on the payroll. Henri has been handling the general manager’s responsibilities and has a good friend working half a day, five days a week, to take care of such matters as bank deposits, preparing accounts payable and payroll checks, and all other routine office and bookkeeping work. Henri is not concerned about the honesty of the person, but he has learned from courses he has taken that any company, however small, needs to have some internal controls. REQUIRED Write a short report to Henri pointing out three specific areas where you believe controls might need to be implemented. For each of the three areas, advise Henri what might happen if a dishonest bookkeeper was hired and how internal control can be implemented to prevent dishonesty. Henri would like to prepare the coming year restaurant budget himself. Please, help Henri understand the…arrow_forward
- Check My Work A small air conditioning repair and parts supply company employs 25 workmen who perform services tasks and 3 office staff: One of the office staff, Harold Jones, has been with the company since it opened its doors. During that time, he has earned the trust of the owner and has proven to be a diligent employee who often works late, occasionally comes in on weekend for no additional pay, and hasn’t taken a substantial vacation in over 10 years. Instead, he staggers his vacation days throughout the year to avoid the need for a replacement and ensuring that none of the other office staff is burdened with his work. Harold’s primary tasks include: Responsible for POS cash and credit sales Bills those customers who purchase on credit Opens the mail and posts cash receipts to AR records, and Prepares the daily cash deposits for the business. Another office worker, Mike Larkin, handles purchasing of inventory and supplies from vendors, stocking, shipping merchandise,…arrow_forwardDave Elliott, CPA, is an assistant to the controller of Lyric Consulting Co. In his spare time, Dave also prepares tax returns and performs general accounting services for clients. Frequently, Dave performs these services after his normal working hours, using Lyric Consulting Co.'s computers and laser printers. Occasionally, Dave's clients will call him at the office during regular working hours. 1. Discuss whether Dave is performing in a professional manner.arrow_forwardPT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employees who is responsible for recording transactions in the purchasing department when ordering raw materials from suppliers. Once, Wilson as the party who made the payments and received the invoices, resigned from the office, so for the moment everything was in Aries' charge. Jenni as COO of PT. Alakitashia really trusts Aries because by seeing the contribution of Aries for a long time, it is also due to the close friendship between them, thus leaving the work entirely and the internal control to Aries itself. This has caused a lack of segregation of duties, so that since it was fully managed by Aries, the number of purchases has increased and it can be seen how the expenses are higher than before, so it is feared that fraud could occur. In addition, Aries has also collaborated with all suppliers and the production department to harmonize the transaction record in the form of the number of units…arrow_forward
- PT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employees who is responsible for recording transactions in the purchasing department when ordering raw materials from suppliers. Once, Wilson as the party who made the payments and received the invoices, resigned from the office, so for the moment everything was in Aries' charge. Jenni as COO of PT. Alakitashia really trusts Aries because by seeing the contribution of Aries for a long time, it is also due to the close friendship between them, thus leaving the work entirely and the internal control to Aries itself. This has caused a lack of segregation of duties, so that since it was fully managed by Aries, the number of purchases has increased and it can be seen how the expenses are higher than before, so it is feared that fraud could occur. In addition, Aries has also collaborated with all suppliers and the production department to harmonize the transaction record in the form of the number of units…arrow_forwardThis year you obtain a new client, Lee Corporation, a regional distributor of appliances. Before becoming your client, Lee had installed a microcomputer-based accounting system to handle its receivable, payables general ledger and payroll. Lee purchases its microcomputer with off-the-shelf software and appears very pleased with it. You notice that the computer sits on the bookkeeper’s desk. You ask Christian Lee, the president, about his feelings about the computer system, and he states: “The system is absolutely great. It has already saved us a lot of time and money. I get reports when I want them, not days later. In fact, it is so good, why don’t you try it? The password is LEE. You can go ahead and use it. If you want any backup files, they are stored in the supply room. We sure saved a lot of money by purchasing the system from a mail-order operation. A system analyst wanted P15,000 to help pick the best system for us, and a local dealer wanted P11,000 more for comparable…arrow_forwardThis year you obtain a new client, Lee Corporation, a regional distributor of appliances. Before becoming your client, Lee had installed a microcomputer-based accounting system to handle its receivable, payables general ledger and payroll. Lee purchases its microcomputer with off-the-shelf software and appears very pleased with it. You notice that the computer sits on the bookkeeper’s desk. You ask Christian Lee, the president, about his feelings about the computer system, and he states:“The system is absolutely great. It has already saved us a lot of time and money. I get reports when I want them, not days later. In fact, it is so good, why don’t you try it? The password is LEE. You can go ahead and use it. If you want any backup files, they are stored in the supply room. We sure saved a lot of money by purchasing the system from a mail-order operation. A system analyst wanted P15,000 to help pick the best system for us, and a local dealer wanted P11,000 more for comparable hardware…arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT