Cari Hawkins is a 50% partner in the calendar year Hawkins-Henry Partnership. On January 1, 2015, her basis in her partnership interest is $160,000. The partnership has no taxable income or loss for...

Firm Q exchanged old property with an $80,000 tax basis for new property with a $65,000 FMV. Under each of the following assumptions, apply the generic rules to compute Qs realized loss, recognized...

Ms. JK recently made a gift to her 19-year-old daughter, Alison. Ms. JKs marginal income tax rate is 39.6 percent, and Alisons marginal income tax rate is 15 percent. In each of the following cases,...

Marcia executed a mortgage on Blackacre to secure her indebtedness to Ajax Savings and Loan Association in the amount of $25,000. Later, Marcia sold Blackacre to Morton. The deed contained the...

Suppose that Firm Body brought an action against Brock claiming that he had breached the duty of loyalty by not disclosing his interest in Sunglow to the other directors. What theory might Brock use...

Liang, a U.S. citizen, owns 100% of ForCo, a foreign corporation not engaged in a U.S. trade or business. Is Liang subject to any U.S. income tax on her dealings with ForCo? Explain.

Assume that the tax law allows individuals to claim an itemized deduction for the cost of music lessons for the taxpayer or any member of his family. Instead of this deduction, individuals may claim...

Several years ago, Lowell, who is single, acquired 1244 stock in Blue Corporation at a cost of $60,000. He sells the Blue stock for $5,000 in the current year. Determine the amount and nature of...

ABC Company is a relatively small dry-cleaning operation that has a very steady level of business. Since the company hired a new employee, however, cash inflows have decreased and the amount of...

Rikki has the following capital gains and losses for the current year: Short-term capital gain . $ 1,000 Long-term capital gain . 11,000 Long-term capital loss .. 3,000 Collectibles gain .... 8,000...

TracFone Wireless, Inc., sells phones and wireless service. The phones are sold for less than their cost, which TracFone recoups by selling prepaid airtime for their use on its network. Software in...

Determine the amount of tax liability in the following situations. In all cases, the taxpayer is using the filing status of married filing jointly. a. Taxable income of $62,449 that includes a...

1. Determine whether this case would be prosecuted as a criminal or civil offense, and state reasons to support your conclusion. 2. Who are the victims of this late-trading scheme, and what losses do...

Evans was a loan officer for a bank and in this capacity had approved several loans to Docherty, all of which were legitimate and were repaid on time. Evans asked Docherty to apply for a loan from...

Helen, a 55% partner in the ABC Partnership, owns land (a capital asset) having a $20,000 basis and a $25,000 FMV. She plans to transfer the land to the ABC Partnership, which will subdivide the land...

(Multiple Choice) 1. Although most perpetrators begin their thefts because of a perceived critical need, they usually continue to embezzle in order to: a. Beat the system. b. Fulfill an inner desire...

Silo Inc. sold investment land to PPR Inc. for $110,000 cash. Silos basis in the land was $145,000. Mr. and Mrs. J own 100 percent of the stock of both corporations. a. What is PPRs tax basis in the...

What are the real economic impacts and long-term effects of trade sanctions? Assume that the United States imposes punishingly high tariffs of 100 percent on Japanese cars. Immediate costs might be...

On March 1, 2013, Harry Corporation (a calendar-year taxpayer) purchased and placed in service office furniture costing $550,000. Compute the maximum amount Harry Corporation could elect to expense...

Describe the three elements of a tort in the following situations: a. Motorists driving on crossing streets come to an intersection with a stop light and collide. b. The owner of Als Donut Shop...

Cory is the fourth-highest-paid officer of the Mast Corporation, a publicly traded corporation. The company pays Cory a salary of $1,100,000. What amount can it deduct as salary expense? Would your...

Sara Bostwick hired Christian Oth, Inc., to be her wedding photographer. The parties written contract granted ownership of the copyright in all images created to Oth. Oth posted the wedding photos on...

Craig Industries was in the business of manufacturing charcoal. Craig, the corporation's president, contracted in the name of the corporation to sell the company's plants to Husky Industries. Craig...

Did Hanousek have the required mental state (mens rea) to be convicted of a crime? Why or why not? Edward Hanousek worked for Pacific & Arctic Railway and Navigation Company (P&A) as a roadmaster of...

Sylvia takes her car to Calebs Auto Repair Shop. A sign in the window states that all repairs must be paid for in cash unless credit is approved in advance. Sylvia and Caleb agree that Caleb will...

73- 75 Main Avenue, LLC, agreed to lease a portion of the commercial property at 73 Main Avenue, Norwalk, Connecticut, to PP Door Enterprise, Inc. Nan Zhang, as manager of PP Door, signed the lease...

Find the Supreme Court case involving Corn Products Refining Company (not the one in which rehearing was denied). a. What is the citation for the case? b. How many Supreme Court cases cite the Corn...

Upward and Onward, Inc., a 501(c)(3) organization that provides training programs for welfare recipients, reports the following income and expenses from the sale of products associated with the...

Alfred is single, and his AMTI of $350,000 consists of the following. What tax rates are applicable in calculating Alfred's TMT? Ordinary income ............................ $250,000 Long-term...

As CEO of your company, youve been going over your financial statements and have noticed something disturbing. You perform a horizontal analysis and find that sales have been increasing at a rate of...

a. Keith Thomas and Thomas Brooks began a new consulting business on January 1, 2015. They organized the business as a C corporation, KT, Inc. During 2015, the corporation was successful and...

At the beginning of the current year, Henry purchased a ski resort for $10 million. Henry does not own the land on which the resort is located. The Federal government owns the land, and Henry has the...

Mark received 10 ISOs at the time he started working for Hendricks Corporation five years ago when Hendricks's price was $5 per share (each option gives him the right to purchase 10 shares of...

Jan Voda, M.D., a resident of Oklahoma City, Oklahoma, owns three U.S. patents related to guiding catheters for use in interventional cardiology, as well as corresponding foreign patents issued by...

(Multiple Choice) 1. The most effective way to reduce losses from fraud is: a. Detecting fraud early. b. Implementing proactive fraud detection programs. c. Preventing fraud from occurring. d....

Calzone Trucking Company is a corporation that is 100% owned by Fred Calzone. Before he incorporated in 2008, Fred had operated the business as a sole proprietorship. The taxable income (loss) of...

Tiffany Pan, a consumer, intends to order three copies of a financial software program from iSoftware, Inc. Tiffany, using her computer, enters iSoftwares website iSoftware.com and places an order...

Mark and Leslee Jones were married in 2000. Mark has an MBA from Harvard and worked in the financial markets in New York City. Leslee has a degree in hotel administration and worked for the Hilton...

Travis and Alix Weber are equal partners in the Tralix partnership, which does not have a 754 election in place. Alix sells one-half of her interest (25%) to Michael Tomei for $30,000 cash. Just...

Melissa, Nicole, and Ben are equal partners in the Opto partnership (calendar year-end). Melissa decides she wants to exit the partnership and receives a proportionate distribution to liquidate her...

Larry Phillips was hired for a two-year period as executive secretary of the Montana Education Association (MEA). Six months later, he was fired. He then sued MEA for breach of contract and sued the...

Clarice Rich was employed by the New York City Board of Education as a clerk. It was her duty to prepare requisitions for checks to be issued by the board, to prepare the checks, to have them signed...

When might a taxpayer undertake transactions seemingly opposite to the usual tax planning principles?

To: [Your name] From: Supervising Attorney Re: Mr. Arturo Garcia; child support modification After 15 years of marriage, Arturo Garcia and Mary Chavez were granted a divorce in May 2001. There are...

1. Staples, following extensive injuries in an automobile accident, was declared mentally incompetent. He imagined himself to be in command of a large army engaged in protecting the country against...

The Christian Science Monitor refused to hire Feldstein because he was not a Christian Scientist. The newspaper said they only hired those who were of the Christian Science religion, unless there are...

Compare and contrast financial statement fraud with embezzlement and misappropriation, especially with respect to who usually commits the fraud. Also contrast the different kinds of fraud with...

1. The court held that the Massachusetts statute discriminated against out-of-state wineries by design (intentionally). How can a court determine legislative intent? 2. Suppose that most small...

ETHICS: 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...

A truck driver trainer sexually harassed a trainee and she brought suit for sexual harassment. The trainer claimed to have power over the trainee, but, in reality, the trainer was not a supervisory...

Myron, Al, and Janda make the following transfers from their sole proprietorships to a newly formed business, each receiving a 1/3 ownership interest. In addition, the business borrows $60,000 from a...

Dynamite Enterprises, Inc. (Dynamite), a corporation doing business in Florida, maintained a checking account at Eagle National Bank of Miami (Bank). Dynamite drew a check on this account, payable to...

Interactive Data Corp. hired Daniel Foley as an assistant product manager at a starting salary of $18,500. Over the next six years Interactive steadily promoted Foley until he became Los Angeles...

Suppose that the contract had no liquidated damages provision (or the court refused to enforce it) and X Entertainment breached the contract. The breach caused the release of the film to be delayed...

The British Broadcasting Corp. (BBC) broadcast a TV program alleging that Terry Venables, a former professional soccer coach, had fraudulently obtained a 1 million loan by misrepresenting the value...

REMC furnished electricity to Helveys home. The voltage furnished was in excess of 135 volts and caused extensive damage to his 110-volt household appliances. Helvey sued REMC for breach of warranty....

Benton, as agent for Savidge, received an insurance settlement check from Metropolitan Life Insurance Co. He indorsed it For deposit and deposited it in Bryn Mawr Trust Co. in Savidges account. What...

When Deana Byers married Steven Byers, she was pregnant with another mans child. Shortly after the marriage, Deana gave birth. The marriage lasted only two months, and the couple separated. In...

Rufus and Rhonda are a married couple with 3 dependent children, all under 16 years of age. Rufus, 46, is an executive with Plowshare Corporation. Rhonda, 39, is a self-employed attorney. Rufus...

Wish, Inc., a 501(c)(3) organization, pays unreasonable compensation to Molly, the treasurer of Wish. Mollys compensation is $600,000. Assume that reasonable compensation would be $500,000. a....

Hal Carney and Trish Protura are two Web and software engineers seeking financial backing for further development of social networking technology they have created. Black Rock LLC is willing to...

Michael and Dianne Shankle divorced. An Arkansas state court ordered Michael to pay Dianne alimony and child support, as well as half of the $184,000 in their investment accounts. Instead, Michael...

While employed as a night security guard at the place of business of A. B. Cate Trucking Company, Fred Fain observed that the office safe had been left unlocked. It contained fifty payroll checks,...

During 2015, Angela sustains serious injuries from a snow-skiing accident. She incurs the following expenses: Item Amount Doctor bills .. $11,700 Hospital bills . 9,400 Legal fees in suit against ski...

(a) Johnson tells Davis that he paid $150,000 for his farm in 2007, and that he believes it is worth twice that at the present time. Relying upon these statements, Davis buys the farm from Johnson...

In Table, no liability and strict liability have the opposite incentive effects upon activity levels.Why? Efficiency of Incentives Created by Liability Rules* yes indicates efficient incentives; no,...

Maureen, a calendar year individual taxpayer, files her 2014 return on November 4, 2016. She did not obtain an extension for filing her return, and the return reflects additional income tax due of...

Corinna was riding her bike on a city street. While she was riding, she frequently looked back to verify that the books that she had fastened to the rear part of her bike were still attached. On one...

The Hobbes Bridge Act is included in which section of the United States Code?

For 2015, Silver Corporation (a calendar year business) incurred the following transactions: Taxable income$3,950,000 Accelerated depreciation on pre-1987 real property (in excess of straight-line...

Nick and Jolene are married. Nick is 61 and retired in 2010 from his job with Amalgamated Company. Jolene is 56 and works part-time as a special education teacher. Nick and Jolene have a substantial...

Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership). Anna contributed land and a building valued at $640,000 (basis...

On July 1, 2012, Rex purchases a new automobile for $40,000. He uses the car 80% for business and drives the car as follows: 8,000 miles in 2012, 19,000 miles in 2013, 20,000 miles in 2014, and...

Soon after Gast purchased a used auto from a Chevrolet dealer, he experienced a series of mechanical problems with the car. Gast refused to make further payments on the bank note that had financed...

The Talent Company, manufacturer of a widely advertised and expensive perfume, sold a quantity of this product to Young, a retail druggist. Dentley and Bird visited Youngs store and Dentley, desiring...

John Bunker has assets of $130,000 and liabilities of $185,000 owed to nine creditors. Nonetheless, his cash flow is positive, and he is making payment on all of his obligations as they become due....

Mary DeFontes bought a computer and a service contract from Dell Computers Corp. DeFontes was charged $950.51, of which $13.51 was identified on the invoice as tax. This amount was paid to the state...

Meyers was under contract with Henderson to install overhead doors in a factory that Henderson was building. Meyers obtained the disassembled doors from the manufacturer. His contract with Henderson...

After watching a male horse owned by Terry and Manita Darby perform at a horse show, Ashley Sheffield contacted the Darbys about buying him. The Darbys assured her that the horse had no problems and...

The Massachusetts Bay Transit Authority (MBTA) awarded the Perini Corp. a large contract to rehabilitate a section of railroad tracks. The work involved undercutting the existing track, removing the...

Mustard Corporation (a C corporation) owns 15% of the stock of Burgundy Corporation (a C corporation), which pays an annual dividend to its shareholders. Mustard is considering the purchase of...

Phyllis maintained an IRA account at the brokerage firm ABC. On February 11 of the current year, she requested a check for the balance of her account. She received the check made out in her name and...

Mary Dobos was admitted to Boca Raton Community Hospital in serious condition with an abdominal aneurysm. The hospital called upon Nursing Care Services, Inc., to provide around-the-clock nursing...

Drehman Paving & Flooring Co. installed a brick floor at Cumberland Farms that its salesman promised would be just like another floor Cumberland had installed several years earlier. The bricks in the...

An importer of childrens toys, Fun N Games, Inc., receives a price quotation from a German toy maker offering toy train sets: KBG train sets. Locomotive. Four cars. Transformers. Thirty pieces of...

An advising bank presents documents to you for payment. How would you respond to each of the following discrepancies? Explain your answer. a. The letter of credit calls for an ocean bill of lading....

Nabil is the owner of a relatively old home valued at $ 105,000. The homes electrical system is failing and the wiring needs to be replaced. He contracts with Kandhari Electrical to replace the...

In the current year, Riflebird Company had operating income of $220,000, operating expenses of $175,000, and a long-term capital loss of $10,000. How do Riflebird Company and Roger, the sole owner of...

Abby's home had a basis of $360,000 ($160,000 attributable to the land) and a fair market value of $340,000 ($155,000 attributable to the land) when she converted 70% of it to business use by opening...

Lento Inc. owned machinery with a $30,000 initial cost basis. Accumulated book depreciation with respect to the machinery was $12,000, and accumulated tax depreciation was $19,100. Lento sold the...

Data Corporation has four employees and provides group term life insurance coverage for all four employees. Coverage is nondiscriminatory and is as follows: a. How much may Data Corporation deduct...

White Plains Coat & Apron Co. is a New Yorkbased linen rental business. Cintas Corp. is a nationwide business that rents similar products. White Plains had five-year exclusive contracts with some of...

Ronald Rawls and Zabian Bailey were in an auto accident in Bridgeport, Connecticut. Bailey rear-ended Rawls at a stoplight. Evidence showed it was more likely than not that Bailey failed to apply his...

Firwood Manufacturing Co. had a contract to sell General Tire 55 model 1225 postcure inflators (PCIs). PCIs are $30,000 machines used by General Tire in its manufacturing process. The contract was...

Karen Thorpe is a purchasing agent for GymNast, Inc., a manufacturer of sports equipment. Karen has authority to sign checks in payment for purchases made by GymNast. Karen makes out three checks to...

Without considering the following capital gains and losses, Charlene, who is single, has taxable income of $460,000 and a marginal tax rate of 39.6%. During the year, she sold stock held for nine...

Sue Ann Apolinar hired a guide through Arkansas Valley Adventures, LLC, for a rafting excursion on the Arkansas River. At the outtter's office, Apolinar signed a release that detailed potential...

The police obtained a search warrant based on an affidavit that contained the following allegations: (a) Donald was seen crossing a State line on four occasions during a five-day period and going to...

Buster Cogdill, a real estate developer, made an offer to the Bank of Benton to have the bank provide construction financing for the development of an outlet mall, with funds to be provided at prime...

Leland McElmurry was one of three partners of MHS Enterprises, a Michigan partnership. Commonwealth Capital Investment Corp. sued the partnership and obtained a judgment of $1,137,285 against it, but...