Question: Freys Inc sells a 12 year franchise to Red Company The
Freys, Inc., sells a 12-year franchise to Red Company. The franchise contains many restrictions on how Red may operate its store. For instance, Red cannot use less than Grade 10 Idaho potatoes; must fry the potatoes at a constant 410 degrees; must dress store personnel in Freys-approved uniforms; and must have a Freys sign that meets detailed specifications on size, color, and construction. When the franchise contract is signed, Red makes a noncontingent $160,000 payment to Freys. During the same year, Red pays Freys $300,000-14% of Red's sales. How does Freys treat each of these payments? How does Red treat each of the payments?
Answer to relevant QuestionsMaria held vacant land that qualified as an investment asset. She purchased the vacant land on April 10, 2010. She exchanged the vacant land for a rental house in a qualifying like-kind exchange on January 22, 2014. Maria ...The taxpayer is an antiques collector and is going to sell an antique purchased many years ago for a large gain. The facts and circumstances indicate that the taxpayer might be classified as a dealer rather than an investor ...Harold, a CPA, has a new client who recently moved to town. Harold prepares the client's current-year tax return, which shows a net § 1231 gain. Harold calls the client to request copies of the returns for the preceding ...Nicholas owns business equipment with a $155,000 adjusted basis; he paid $200,000 for the equipment, and it is currently worth $173,000. Nicholas dies suddenly, and his son Alvin inherits the property. What is Alvin's basis ...Each year, Tom and Cindy Bates normally have itemized deductions of $10,000, including a $4,000 pledge payment to their church. Upon the advice of a friend, they do the following: in early January 2013, they pay their pledge ...
Post your question