Debbie is 23 years old, a full-time student and a dependent of her parents. She earns $4,200 working part-time and receives $2,200 interest on savings. She saves both the salary and interest. What is...

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2014, his business recorded the following items of income and expense: Revenue from inventory sales...

Owner has a place on his land where he piles trash. The pile has been there for three months. John, a neighbor of Owner and without Owners consent or knowledge, throws trash onto the trash pile....

What are the sources and causes of complexity in our tax system? Which, if any, of these causes are correctable?

In 1994, David and Corrine Bako signed a contract with Don Walter Kitchen Distributors, Inc. (DW), for the purchase and installation of cabinets in their new home. DW ordered the cabinets from a...

Explain the common-law methods of resolving pollution problems and evaluate their effectiveness.

Griffin Corporation received $50,000 of dividend income from Eagle, Inc. Griffin owns 5 percent of the outstanding stock of Eagle. Griffins marginal tax rate is 35 percent. a. Calculate Griffins...

B. J. and Carolyn Grace are full-time employees. B. J. is an elementary school teacher, and Carolyn is a registered nurse at a hospital. During the year, they incur the following employment-related...

For 2016, Essence Company, a calendar year taxpayer, will change from using the cash method for tax purposes to the accrual method. At the end of 2015, Essence had the following items: Accounts...

Custom Copies, Inc., in Gainesville, Florida, is a copy shop that, on request, reproduces and distributes, for profit, material published and owned by others. One of the copy shops primary activities...

Eugene McCarthy left his position as director of sales for Nikes Brand Jordan division in June 2003 to become vice president of U.S. footwear sales and merchandising at Reebok, one of Nikes...

Hudson & Muma, Inc., was a small, family-owned insurance agency. Andrew Muma, the son of the founder, was an officer, shareholder, and director of the company. Andrew left the company and began...

The Smooth Paving Company entered into a paving contract with the city of Chicago. The contract contained the clause contractor shall be liable for all damages to buildings resulting from the work...

A thief stole a car and sold it to a good-faith purchaser for value. This person resold the car to another buyer, who also purchased in good faith and for value. The original owner of the car sued...

For burglary, the victims loss usually exceeds the injurers gain, but the opposite is true for breach of contract. Why? What are the implications for relative dollar values of compensation and...

AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $500,000 cash and YZ contributed land ($500,000 FMV and $430,000 basis) in exchange for a 50...

Ames leased an apartment to Boor at $200 a month, payable the last day of each month. The term of the written lease was from January 1, 2010, through April 30, 2011. On March 15, 2010, Boor moved...

Find the court decision located at 67 AFTR2d 91-718. 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 Code...

Prior to 1918, the Petrograd Metal Works, a Russian corporation, deposited a large sum of money with August Belmont, a private banker doing business in New York City under the name August Belmont &...

Barbara Legault operates a full-time law practice in southwestern Ontario. In her spare time, she maintains a small rural acreage for the purpose of growing and selling Christmas trees. In addition,...

Carlin Krieg owned a dairy farm in St. Joe, Indiana, that was appraised at $154,000 in December 1997. In August 1999, Krieg told Donald Hieber that he intended to sell the farm for $106,000. Hieber...

Sarah Welch was hired 15 years ago by Produce-R-Us, an importer of rare and exotic fruits. Produce-R-Us was started by an immigrant family 20 years ago and has grown to a national company with sales...

You are performing an audit of a small Internet start-up company that recently went public. During the audit, you frequently converse with the employees, with whom you have a comfortable...

Mr. T (a 45-year-old single taxpayer) exercised an ISO and purchased $380,000 worth of his employers stock for only $113,000. His only other income was his $158,500 salary, and he doesnt itemize...

Florida Corporation incurs AMT for the first time in the current year. The main reason for incurring the AMT is a $2 million gain on a current year installment sale that Florida is recognizing over...

On May 15 of the current year, Quick Corporation distributes to its shareholder Calvin a building having a $250,000 FMV and used in Quicks business. The building originally cost $180,000. Quick...

Phillips and Harris are partners in a used car business. Under their oral partnership, each has an equal voice in the conduct and management of the business. Because of their irregular business...

Until its involvement as Enrons auditor, Arthur Andersen was recognized as one of the most respected CPA firms in the world. Arthur Andersen, as did other large CPA firms, operated as a limited...

Flint Hills Resources, LP, a crude oil refiner, agreed to buy approximately 1,000 barrels per day of Mexican natural gas condensate from JAG Energy Inc., an oil broker. Four months into the contract,...

Arnett Gertrude, a widow with no children, lived with her sister and her nephew Jack Scriber. When Gertrude was diagnosed with cancer, she added Scriber as an authorized signatory to her checking...

Smith Services, Inc., was a corporation solely owned by Tony Smith. Bear, Inc., owned and operated Laker Express, a fueling station in Kentucky. Smith charged fuel to an account at Laker Express and...

George Gibbons, William Smith, and Gerald Zollar were all shareholders in GRG Operating, Inc. (GRG). Zollar contributed $ 1,000 of his own funds so that the corporation could begin to do business. In...

After living in their home for three years, Roger Nathaniel and Sharon Diamond sold the home to the plaintiff s, Marc Copland and Joan Lund. Nathaniel and Diamond hired a pest control company to...

Jenny is an accountant for an international energy corporation. She oversees the accounting for certain associated offshore entities. The amount of funds involved in the entities is substantial. At...

Green Grocery Company employed Jones as its manager. Jones was given authority by Green to purchase supplies and goods for resale and had conducted business for several years with Brown Distributing...

While reviewing pre-employment reports as part of her job, the claimant read a report in which an applicant admitted commenting to an employee at a prior job that making love to you is like making...

You are a vice president in charge of personnel at a large manufacturing company. In-house detectives inform you that Gates, an employee, was seen stealing valuable computer equipment. Gates denies...

Before Parriss lawsuit against Railroad had settled, he left town and closed out his account with Bank. Railroad then issued a check to him which somehow came to be in Eddys possession. Eddy indorsed...

A South African firm applied for a revolving letter of credit in favor of a German exporter at a branch of Barclays Bank in Johannesburg. The letter of credit was issued covering shipments of...

In the following problems: Draft a shorthand or broad statement of the issue. Draft a comprehensive or narrow statement of the issue in the relevant law + legal question + key facts format. For the...

Doug receives a duplex as a gift from his uncle. The uncles basis for the duplex and land is $90,000. At the time of the gift, the land and building have FMVs of $40,000 and $80,000, respectively. No...

Catherine Wagner suffered serious physical injuries in an automobile accident and became acutely depressed as a result. One morning, she received a check for $17,400 in settlement of her claims...

Led Foot drives his car carelessly into another car. The second car contains dynamite, which Led had no way of knowing. The collision causes an explosion, which shatters a window of a building half a...

Adam, Stanley, and Rosalind formed a partnership in State X to distribute beer and wine. Their agreement provided that the partnership would continue until December 31, 2014. Which of the following...

Juan Sanchez writes the following note on the back of an envelope: I, Juan Sanchez, promise to pay Kathy Martin or bearer $500 on demand. Is this a negotiable instrument? Discuss fully.

Multiply Choice 1. At Business University, semester enrollment begins at midnight on April 1. Jasper asked his roommate, Alonso, to register him for an important required course as a favor. Alonso...

Jim owns 80% of Gold Corporation stock. He transfers a business automobile to Gold in exchange for additional Gold stock worth $5,000 and Golds assumption of both his $1,000 automobile debt and his...

George owed Keith $800 on a personal loan. Neither the amount of the debt nor Georges liability to pay the $800 was disputed. Keith had also rendered services as a carpenter to George without any...

Anne, who was unemployed, registered with the Speedy Employment Agency. A contract was then made under which Anne, in consideration of such position as the Agency would obtain for her, agreed to pay...

1. Schultz argued that even if the corporate veil should be pierced, the $450,000 judgment against him was too much and should be reduced. How might the court have responded to this argument? 2....

In a January 2000 prospectus for its initial public offering of shares, Apex Oil Discovery Co. (AODC) estimated a sizable volume of oil production based on the studies of two geologists and a test...

LaBarge Pipe & Steel Company agreed to sell PVF $143,613.40 of 30-inch pipe provided that PVF obtain a letter of credit for $144,000, with the letter of credit entitling LaBarge to payment if PVF did...

During the current year, Tina purchases a beachfront condominium for $600,000, paying $150,000 down and taking out a $450,000 mortgage, secured by the property. At the time of the purchase, the...

WCM Builders enters into a contract to build a shopping mall in 2016 for $6,000,000. Completion of the mall is expected to take 2 years and cost WCM $3,600,000. Upon signing the contract, WCM...

Adams, by fraudulent representations, induced Barton to purchase one hundred shares of the capital stock of the Evermore Oil Company. The shares were worthless. Barton executed and delivered to Adams...

In June 1993, Sparkomatic Corp. agreed to negotiate a sale of its Kenco Engineering division to Williams Controls, Inc. At the end of July, Sparkomatic asked its accountants, Parente, Randolph,...

The TUV Partnership is considering two compensation schemes for Tracy, the partner who runs the business on a daily basis. Tracy can be given a $10,000 guaranteed payment, or she can be given a...

Williams Corporation has operated as a C corporation for the last seven years. The corporation has assets with a $450,000 adjusted basis and an $800,000 FMV. Liabilities amount to $100,000. Dan...

Allie received a $50,000 distribution from her 401(k) account this year that she established while working for Big Stories, Inc. Assuming her marginal ordinary tax rate is 25 percent, how much tax...

Reserve Mining Co. obtained a permit from the Minnesota Pollution Control Agency to dump wastewater into the nearby Beaver River. The permit specified that no more than 1 million fibers per liter...

Michael Sark operated a logging business as a sole proprietorship. To acquire equipment for the business, Sark and his wife, Paula, borrowed funds from Quality Car & Truck Leasing, Inc. When his...

1. Today, children are likely exposed to indecent language in various media far more often than they were in the 1970s, when the Federal Communications Commission first began to sanction indecent...

Randall owns an office building (adjusted basis of $250,000) that he has been renting to a group of physicians. During negotiations over a new seven-year lease, the physicians offer to purchase the...

Assume that Sivart Corporation has 2017 taxable income of $750,000 for purposes of computing the 179 expense and acquired the following assets during the year: a) What is the maximum amount of 179...

Assume that you are a high-level manager for a shoe manufacturer. You know that your firm could increase its profit margin by producing shoes in Indonesia, where you could hire women for $40 a month...

Jones lived in California. She met Williams, a therapist who lived in New Mexico. For four years, Williams provided Jones weekly psychotherapy and dream counseling by telephone from New Mexico....

Whitney Corporation acquires Jessamine Corporation. Prior to the merger, Jessamine accumulated a $12,000,000 NOL. After the reorganization, Whitney generates $30,000,000 of taxable income. Whitney...

Michelle and Mark are married and file a joint return. Michelle owns an unincorporated dental practice. Mark works part-time as a high school math teacher, and spends the remainder of his time caring...

When and for what purpose is each of the following motions made? Which of them would be appropriate if a defendant claimed that the only issue between the parties was a question of law and that the...

How do fraud symptoms help in detecting fraud?

Bobs Country Kitchen, a small family-owned restaurant in northern New York, has seen a drop in profitability over the past three years and the owners want to know why. Bobs has been a local favorite...

Daren has been retained by the defendants, as an expert witness in a recent fraud case. He will be providing information concerning the defendants activities, explaining why the defendants activities...

Barcel, a Mexican company, contracted with Kliff, a citizen of California, to buy 47 million foil Britney Spears trading cards to be placed in snack food packaging in direct contact with food. The...

1. In deciding whether a clause provides for liquidated damages or a penalty, should the courts ever consider the circumstances that caused the nonperforming party to breach the contract? Explain. 2....

The tax rules governing the Federal consolidated tax return elections are largely in the form of Treasury Regulations and IRS rulings. Why? When is the split between the legislative and executive...

Cougar, Jaguar, and Ocelot Corporations have filed on a consolidated, calendar year basis for many years. At the beginning of the tax year, the group elects to de-consolidate. The group's $6 million...

The United Arab Emirates (UAE), a country in the Middle East, held a competition for the architectural design of a new embassy it intended to build in Washington DC. Elena Sturdza, an architect...

Kold Services Corporation estimates that its 2015 taxable income will be $500,000. Thus, it is subject to a flat 34% income tax rate and incurs a $170,000 liability. For each of the following...

Barry Potter and Winnie Weasley are considering making an S election on March 1, 2014, for their C corporation, Omniocular. However, first they want to consider the implications of the following...

What would constitute the right to control under a franchise contract?

Blaylock was a voluntary psychiatric outpatient treated by Dr. Burglass, who became aware that Blaylock was violence prone. Blaylock told Dr. Burglass that he intended to do serious harm to Wayne...

Determine the adjusted basis of each of the following assets: a. Andre purchased a parcel of land three years ago for $17,000. In the current year, the adjoining property owner sues him, claiming...

Why do the tax laws sometimes discriminate against related party contracts? Is this always in societys best interest?

At approximately 3:00 A.M., on February 3, 2000, Sonya Winchell was driving two of her friends through a Fort Wayne Taco Bell drive-thru. When Winchell arrived in line, there was one car in front of...

Richtone Design Group LLC (Richtone) is a New York limited liability company (LLC) that owns the copyright to the Pilates Teacher Training Manual and licenses fitness instructors to teach pilates...

Mr. and Mrs. WGs AGI averages $600,000, and they are in the 39.6 percent tax bracket. They support their 22-year-old son who is a full-time college student. Mr. and Mrs. WG are considering giving him...

On February 2, Mr. Eugene Pomeroy transferred all the assets of his sole proprietorship (Pomeroys Ski Shop) to a newly created corporation, Pomeroy Ski Inc. In exchange for the business assets, Mr....

Compute Aiden's 2016 taxable income on the basis of the following information. Aiden is married but has not seen or heard from his wife for over three years. Salary...

Michael, a minor, operates a one-man automobile repair shop. Anderson, having heard of Michaels good work on other cars, takes her car to Michaels shop for a thorough engine overhaul. Michael, while...

Under an oral agreement, Hyer rented from Bateman a vacant lot for a filling station. Hyer placed on the lot a lightly constructed building bolted to a concrete slab and several storage tanks laid on...

Your father-in-law owns a medium-sized air conditioning company in Meza, Arizona. Because of the heat in Arizona, the company has done rather well and the business is continually growing. Your...

(True and False) 1. Once an identity theft victim has reported a fraud to the FTC, the FTC will help a victim contact the FBI, Secret Service, and local police to coordinate an investigation. 2. The...

Janell Arden is a purchasing agentemployee for the A&B Coal Supply partnership. Arden has authority to purchase the coal needed by A&B to satisfy the needs of its customers. While Arden is leaving a...

Jumping Jills, Inc., was a corporation that provided trampolines for the use of the public. Defendant Jones owned 80 percent of the stock of Jumping Jills, Inc.; his wife owned 10 percent; and his...

Mr. and Mrs. K file a joint income tax return. Compute their standard deduction assuming that: a. Mr. K is age 68, and Mrs. K is age 60. b. Mr. K is age 70, and Mrs. K is age 68. c. Mr. K is age 70,...

Western Corporation reports the following results for the current year: Gross profits on sales ..$150,000 Long-term capital gain 8,000 Long-term capital loss . 15,000 Short-term capital gain 10,000...

Suppose that the day after Lucy signed the purchase agreement for the farm, he decided that he didnt want it after all, and Zehmer sued Lucy to perform the contract. Would this change in the facts...

If Chelene knew about the problem with the walls but did not know that the house was structurally unsound, could she be liable for negligent misrepresentation? Why or why not? Chelene had been a...

Hegyes was driving her car when it was negligently struck by a Unjian Enterprises truck. She was injured, and an implant was placed in her body to counteract the injuries. She sued Unjian, and the...

Christy Pontiac, a corporation, was indicted for theft by swindle and forgery involving a GM cash rebate program. Hesli, a middle-management employee of Christy Pontiac, had forged the cash rebate...