1. Which of the following non-control factors provides opportunities for fraud? a. Inability to judge the quality of performance. b. Lack of access to information. c. Failure to discipline fraud...

Dr. Sanders is a veterinarian who is the sole shareholder of Vet, Inc., an S corporation. The corporation offers Dr. Sanders' consulting and surgical services to other veterinarians. Dr. Sanders does...

Michael Hauck claimed that he was discharged by his employer, Sabine Pilot Service, because he refused its direction to perform the illegal act of pumping the bilges of the employers vessel into the...

A taxpayer purchases $507,000 worth of property that qualifies for the Section 179 deduction during the current year. The taxpayer would like to deduct the greatest depreciation expense possible...

Run America, Inc., manufactures running shoes. Its shoe is consistently rated poorly by Run Run Run magazine in its annual shoe review. The number one shoe in Run Run Runs review is the Cheetah a...

Alice, Bob, Carol, the ABC Partnership, Franklin Corporation, and the Gleason Family Trust own shares of Holston Corporation's single class of stock as follows: The Holston shareholders have owned...

Jay signed a two-year lease containing a clause that expressly prohibited subletting. After six months, Jay asked the landlord for permission to sublet the apartment for one year. The landlord...

During the past year, your company has discovered three major frauds. The first was a $3.9 million theft of inventory that had been going on for six years. The second was a $2.8 million kickback...

Lydia owns 75% of Flower Farms, a partnership. She also owns land that she leases to Flower Farms for $6,000 per month. Identify the tax issue(s) posed by the facts presented. Determine the possible...

Fawn Corporation, a C corporation, paid no dividends and recognized no capital gains or losses in the current year. What is its income tax liability assuming its taxable income for the year is a....

Steven Trujillo, told by the assistant door manager of Cowboys Bar to show up to work tonight in case we need you as a doorman, came to the bar that evening wearing a jacket with the bar logo on it....

Richard Ramlall was hired by CloseCall (MD) Inc. to negotiate a billing dispute with Verizon involving some $2 million in asserted overcharges. CloseCall (MD) agreed to a contingent fee "bonus" for...

Duke Corporation owns an office building with a $400,000 adjusted basis. The building is destroyed by a tornado. The insurance company paid $750,000 as compensation for the loss. Eight months after...

Given the following information about a potential suspect, determine whether there is a likelihood of illegal income. If so, determine the amount of unknownincome. FINANCIAL DATA YEAR 1 YEAR 2YEAR 3...

Alicia and Rafel are in the process of negotiating a divorce agreement. They both worked during the marriage and contributed an equal amount to the marital assets. They own a home with a fair market...

Sandra Primrose, who was 73 years old, was shopping in a Walmart store owned and operated by WalMart Stores, Inc. (Walmart). She picked up a watermelon from a large display stand and as she took...

Suppose that a car stalls on the railroad tracks because its carburetor is badly maintained. A train collides with the car because the trains brakes are badly maintained. What is the proximate cause...

LTV Aerospace Corp. manufactured all-terrain vehicles for use in Southeast Asia. LTV made an oral contract with Bateman under which Bateman would supply the packing cases needed for the vehicles...

Janine was hospitalized with severe abdominal pain and placed in an intensive care unit. Her doctor told the hospital personnel to order around-the-clock nursing care for Janine. At the hospitals...

Using the legend provided, classify each of the following citations as to the location. A citation may have more than one answer. a. 61(a)(13). b. Prop.Reg. 1.3682(b)(1). c. Rev.Proc. 7737, 19772...

1. Identify the correct answer about the purposes of Schedules M-1 and M-3. 2. Kelsey Corp. is an accrual-basis, calendar-year domestic corporation which is not part of a consolidated group. In the...

John Stevens owned a dilapidated apartment that he rented to James and Cora Chesney for a low rent. The Chesneys began to remodel and rehabilitate the unit. Over a four-year period, they installed...

John Waddell Construction Company (Waddell) maintained a checking account at the Longview Bank & Trust Company (Longview Bank). Waddell drafted a check from this account made payable to two payees,...

H. J., Inc., and other customers of Northwestern Bell Corp. alleged that Northwestern Bell had furnished cash and tickets for air travel, plays, and sporting events and had offered employment to...

Since the 1990 revision of Article 4, a bank is no longer required to include the customers canceled checks when it sends monthly statements to the customer. A bank may simply itemize the checks (by...

Cornflower Corporation distributes equipment (adjusted basis of $70,000, fair market value of $55,000) to its shareholder, Roy. Assume that Cornflower has more than $100,000 of current E & P. What...

1. Is Bhagat liable as an insider even though he was a relatively low-level employee? Why? 2. What role did Bhagats credibility play in this case? NVIDIA, a publicly-held corporation that...

Firm B wants to hire Mrs. X to manage its advertising department. The firm offered Mrs. X a three-year employment contract under which it will pay her an $80,000 annual salary in years 0, 1, and 2....

Michael Kennedy (1635 Maple Street, Syracuse, NY 13201) exchanges property (basis of $200,000 and fair market value of $850,000) for 75% of the stock of Red Corporation. The other 25% is owned by...

Wayne signed a subscription agreement to purchase one hundred shares of stock of the proposed ABC Company, at a price of $18 per share in a State that has adopted the Revised Act. Two weeks later,...

Goose Corporation has a basis of $2.4 million in the stock of Swift Corporation, a wholly owned subsidiary acquired 30 years ago. Goose liquidates Swift Corporation and receives assets that are worth...

Eta Corporation approaches Lily White, the CEO and sole shareholder of MuCo, regarding the acquisition of MuCo's cat toy division assets (worth $1.3 million). As selling the assets would create a...

Marty Mankamyer, the president of the United States Olympic Committee (USOC), resigned in early February 2003 following reports in The Denver Post that indicated she had demanded a commission from a...

Torsten owns 100% of Taupe Corporation, which had net operating income of $420,000 and long-term capital gain of $30,000 in 2015. Torsten has sufficient income from other sources to be in the 39.6%...

Caramel Corporation has 5,000 shares of stock outstanding. In a qualifying stock redemption, Caramel distributes $145,000 in exchange for 1,000 of its shares. At the time of the redemption, Caramel...

Kantner, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Based on this information, determine Kantners net deferred tax asset or net...

Would buying a car from a mechanic who works at a car dealership qualify as purchasing a car in the ordinary course of business? [Steele v Ellis, 961 F Supp 1458 (D Kan)]

Michelle Fleshner worked for Pepose Vision Institute (PVI), a surgical practice. She was fired after she provided information to the Department of Labor about PVIs overtime pay policy. She sued for...

Charles has AGI of $94,000 during the year and the following expenses related to his employment: Lodging while in travel status ........... $5,000 Meals during travel ................ 4,000 Business...

Triec, Inc., is a small electrical contracting company in Springfield, Ohio, owned by its executives, Yeazell, Jones, and Heaton. Employees contacted the International Brotherhood of Electrical...

Refer to Morgan v. Greenwaldt at the end of Chapter 10. Identify the citation, holding, and disposition.

Using the legend provided, classify the impact that each of the following items has on unadjusted AMTI in arriving at ACE: Legend I = Increase in AMTI D = Decrease in AMTI E = Either an increase or a...

You are an outside director of Crowler Inc., a manufacturer of kitchen and bathroom fixtures such as faucets, shower heads, and shower doors. Crowler has 29,000 employees worldwide, including 18,000...

Explain how each political theory appears in modern-day government.

On November 13, Underhill Inc., a calendar year taxpayer, purchased a business for a $750,000 lump-sum price. The businesss balance sheet assets had the following appraised FMV: Accounts receivable ...

Bali Inc. reported $605,800 net income before tax on this years financial statements prepared in accordance with GAAP. The corporations records reveal the following information. Depreciation expense...

John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303....

Tonya, who lives in California, inherited a $100,000 State of California bond in 2016. Her marginal Federal tax rate is 35%, and her marginal state tax rate is 5%. The California bond pays 3.3%...

Dusan is a member of the Tonda LLC, and all members have equal interests in capital and profits. The LLC has made an optional adjustment-to-basis election. Dusans interest is sold to Adele for...

Lou and Stella North are married, file a joint return, and have two dependent children in college, Phil and Jaci. Phil attends a State University in a neighboring state, and Jaci attends a State...

Fargo Corporation holds $5 million in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $310,000; basis of the land to Fargo is $260,000. Determine the Federal income...

1. Is the Smiths loan covered by the Truth-in-Lending Act as amended by the Home Ownership and Equity Protection Act? Why or why not? 2. Do the Smiths have a right to rescind the loan two weeks after...

Michigan Motors is a U.S. corporation with $1 billion of U.S.-source income. In addition, Michigan Motors owns 60% of Detroit Parts, a U.S. corporation with a total of $200 million of U.S.-source in-...

Thomas is the CEO of a business that just went public. He is feeling intense pressure for the business to succeed because all of his relatives have invested heavily in his company. Since going...

Like many students, Barbara Hann financed her education partially through loans. These loans included three federally insured Stafford Loans of $ 7,500 each ($ 22,500 in total). Hann believed that...

Under Rowena's will, Mandy (Rowena's sister) inherits her property. One year later, Mandy dies. Based on the following independent assumptions, what is Mandy's credit for the tax on prior transfers?...

Atlantic Corporation provides a cafeteria for its employees. The meal charges are set at a sufficiently high level that the employees are not taxed on the subsidized eating facilities. Are Atlantic's...

Myers, who is single, reports compensation income of $68,000 in 2016. He is an active participant in his employer's qualified retirement plan. Myers contributes $5,500 to a traditional IRA. Of the...

Gordon Construction Company (Gordon) was a general contractor in the New York City area. Gordon planned on bidding for the job of constructing two buildings for the Port Authority of New York. In...

Robin Corporation would like to transfer excess cash to its sole shareholder, Adam, who is also an employee. Adam is in the 28% tax bracket, and Robin is in the 34% bracket. Because Adams...

The KLM Partnership owns the following assets on March 1 of the current year: a. Which partnership items are unrealized receivables? b. Is the partnerships inventory substantially appreciated? c....

Are the plaintiffs seeking a legal remedy or an equitable remedy? Why? Suppose the California legislature passes a law that severely restricts carbon dioxide emissions from automobiles in that state....

DaimlerChrysler Corp. made and marketed motor vehicles. DaimlerChrysler assembled the 1993 and 1994 model years of its trucks at plants in Mexico. Assembly involved sheet metal components sent from...

Is the following instrument a note, a check, or a draft? Why? If it is not a check, how would you have to change it to make it a check? To: Arthur Adams January 1, 2013 TEN DAYS AFTER DATE PAY TO THE...

Kenisha and Shawna form the equal KS LLC with a cash contribution of $360,000 from Kenisha and a property contribution (adjusted basis of $380,000, fair market value of $360,000) from Shawna. a. How...

Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2015, its second year of operation. Taxable income .. $330,000 Federal income tax liability paid ...

Determine whether the following transactions are taxable. If a transaction is not taxable, indicate what type of reorganization is effected, if any. a. AlphaPsi Corporation owns two lines of business...

Mr. and Mrs. WD had the following income items: Mr. WDs salary $105,000 Mrs. WDs earnings from self-employment . 50,000 The income tax deduction for Mrs. WDs SE tax was $3,532. Mr. WD contributed the...

Gable, the owner of a lumber company, was cutting trees over the boundary line between his property and property owned by Lane. Although he realized he had crossed onto Lanes property, Gable...

A police officer who is assigned to a casino refuses the assignment, claiming his Baptist religion prohibits him from gambling or being around gambling. Is he legitimately able to do so? [Endres v....

Roper Corporation reports the following results for the current year: Gross profits on sales . $80,000 Short-term capital gain ... 40,000 Long-term capital gain 25,000 Dividends from 25%-owned...

Olympic National Agencies was organized with an authorized capitalization of preferred stock and common stock. The articles of incorporation provided for a 7 percent annual dividend for the preferred...

Paden signed an agreement dated May 28 to purchase the Murrays home. The Murrays accepted Padens offer the following day, and the sale closed on June 27. Paden and his family moved into the home on...

During the year, Eugene had the four property transactions summarized below. Eugene is a collector of antique glassware and occasionally sells a piece to get funds to buy another. What are the amount...

In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payments to its sole owner, Sasha. In addition, Azure has interest on municipal...

Contract Selchow & Richter Company (S& R) owns the trademark to the famous board game Scrabble. Mark Landsberg wrote a book on strategy for winning at Scrabble and contracted S& R to request...

Alice was Peters traveling salesperson and was also authorized to collect accounts. Before the agreed termination of the agency, Peter wrongfully discharged Alice. Alice then called on Tom, an old...

Day Care Center has a policy stating that no employee can be over 5 feet 4 inches because the employer thinks children feel more comfortable with people who are closer to them in size. Does Tiffany,...

Purple Corporation, a calendar year taxpayer, began operations in 2012. It reported the following amounts for its first four tax years. Calculate Purples positive and negative ACE adjustments for...

Willingham proposed to obtain an investment property for the Tschiras at a "fair market price," lease it back from them, and pay the Tschiras a guaranteed return through a management contract. Using...

Locate the following cited items and give a brief description of the topic or opinion in the item: a. 6694(a). b. 1.6694-1(b). c. Rev. Rul. 86-55, 1986-1 C.B. 373. d. PLR 8022027.

ListCo reports the following income for the current tax year. Operations ............. $92,000 Tax-exempt interest income ...... 19,000 Long-term capital gain ......... 60,000 ListCo holds earnings...

Suppose that Sage had ordered the scooter through the dealers Web site but the dealer had been unable to deliver it by the date promised. What would the FTC have required the merchant to do in that...

1. An approved drug use test must be conducted within reasonable parameters. In Capua, the court determined that a urine collection process may not be reasonable if done under close surveillance of a...

Last year, only four of 32 professional sports teams in a new league turned a nominal accounting profit. Betty purchased such a team this year. Her taxable loss was determined to be $ 950,000. Can...

Mr. O earned an $89,000 salary, and Mrs. O earned a $40,330 salary. The couple had no other income and cant itemize deductions. a. Compute their combined tax if they file separate returns. b. Compute...

Suppose that Executive Aviation files a lawsuit in court against Air Ruidoso for the $10,000 past-due debt. What two methods discussed in this chapter would allow the court to seize Air Ruidosos...

1. Based on Guz, can the implied covenant of good faith and fair dealing apply to any conditions not actually stated in a contract? In other words, can the covenant apply to anything beyond that...

Find the court decision located at 108 AFTR 2d 2011-5569. a. Which court heard the case? b. Who was the judge(s)? c. Which tax year(s) is in question and in what year was the case decided? d. Which...

On May 9, 2014, Calvin acquired 250 shares of stock in Aero Corporation, a new startup company, for $68,750. Calvin acquired the stock directly from Aero, and it is classified as 1244 stock (at the...

Kim purchased on credit a $1,000 freezer from Silas Household Appliance Store. After she had paid approximately $700, Kim missed the next monthly installment payment. Silas repossessed the freezer...

Shannons physician gives her some pain medication and tells her not to drive after taking it because the medication induces drowsiness. In spite of the doctors warning, Shannon decides to drive to...

Under what doctrine discussed in this chapter might Buy-Mart be held liable for the tort committed by Watts? Lynne Meyer, on her way to a business meeting and in a hurry, stopped at a Buy-Mart store...

Biko owns a snowmobile manufacturing business, and Miles owns a mountain bike manufacturing business. Because each business is seasonal, their manufacturing plants are idle during their respective...

Iota Management Corporation entered into a contract to purchase the Bel Air West Motor Hotel in the city of St. Louis from Boulevard Investment Company. The agreement contained the following...

Last year, your client, Roberto Dinero, mailed an automatic extension for his tax return on April 15. He enclosed a check for $ 10,000 with the extension request. The IRS cashed the check on April...

Martin, Mark, and Marvin formed a retail clothing partnership named M Clothiers and conducted a business for many years, buying most of their clothing from Hill, a wholesaler. On January 15, Marvin...

In a Las Vegas casino, an employee discovered a flaw in the accounting system. The accounts payable clerk discovered that he was able to change the names of vendors in the computer system to his...

Smith, having contracted to sell to Beyer thirty tons of described fertilizer, shipped to Beyer by carrier thirty tons of fertilizer, which he stated conformed to the contract. Nothing was stated in...

Rancho Mortgage, Inc., is planning a new advertising campaign designed to attract homebuyers in a difficult economic environment. Rancho wants to promote its new loan product, which offers a fixed...