J.A. Coghill owned a used Rolls Royce Corniche automobile, which he sold to a man claiming to be Daniel Bellman. Bellman gave Coghill a cashiers check for $ 94,500. When Coghill tried to cash the...

Jason and Jill are married and have a six-year-old daughter. During the year, they sell one acre of land for $80,000. Three years ago, they paid $70,000 for two acres of land. Their other income and...

Dr. North, a surgeon practicing in Georgia, engaged an Arizona professional corporation consisting of twenty lawyers to represent him in a dispute with a Georgia hospital. West, a member of the law...

Jeff, a 52% owner of an S corporation, has a stock basis of zero at the beginning of the year. Jeff's basis in a $10,000 loan made to the corporation and evidenced by a corporate note has been...

On January 1 of the current year, Rhondell Corporation has accumulated E & P of $13,000. Current E & P for the year is $84,000, earned evenly throughout the year. Elizabeth and Jonathan are sole...

The U.S. pineapple industry alleged that producers of canned pineapple from the Philippines were selling their canned pineapple in the United States for less than its fair market value (dumping). The...

Roslyn is a food buyer for Organic Cornucopia Food Company when she decides to go into business for herself as Roslyns Kitchen. She contacts Organics suppliers, offering to buy their entire harvest...

The following actual fraud occurred in a communications company. What Ruth Mishkin did in her spare time didnt concern the Boca Raton, Florida, public relations firm where she worked very much. We...

The Obstacles (a) A Newsweek article on business ethics concludes, Even in todays complex world, knowing whats right is comparatively easy. Its doing whats right thats hard. Explain why this...

George and Aimee are married. George has wage income of $190,000, and Aimee has a sole proprietorship that generated net income of $85,000. They also have interest and dividend income of $21,000....

Minority shareholders of Midwest Technical Institute Development Corporation, a closed-end investment company owning assets consisting principally of securities of companies in technological fields,...

Josef Boehm was an officer and the majority shareholder of Alaska Industrial Hardware, Inc. (AIH), in Anchorage, Alaska. In August 2001, Lincolnshire Management, Inc., in New York, created AIH...

KTR Company earns a $10 profit on each unit of manufactured goods, and it sells 20 million units each year. KTRs income tax rate is 20 percent. However, the jurisdiction in which KTR operates just...

Macrotech, Inc., develops an innovative computer chip and obtains a patent on it. The firm markets the chip under the trade- marked brand name Flash. Macrotech wants to sell the chip to Nitron, Ltd.,...

Joseph Mitsch purchased a used Chevrolet Yukon SUV vehicle from Rockenbach Chevrolet. The Yukon was manufactured by General Motors Corporation (GMC). The Yukon had been driven over 36,000 miles. The...

Allison, Keesha, and Steven each own equal interests in KAS partnership, a calendar year-end, cash-method entity. On January 1 of the current year, Steven's basis in his partnership interest is...

Elaine Case (single with no dependents) has the following transactions in 2014: AGI (exclusive of capital gains and losses) ....... $240,000 Long-term capital gain ............... 22,000 Long-term...

After Edward Miller left his job as a salesperson at the New England Insurance Agency, Inc., he took some of his New England customers to his new employer. At New England, the customer lists had been...

Marlin Company has suspected something fishy for several months. It has noticed that its profits have been slowly decreasing, while revenues have been increasing. After consulting with you, a fraud...

Firm OCS sold business equipment with a $20,000 initial cost basis and $7,315 accumulated tax depreciation. In each of the following cases, compute OCSs recaptured ordinary income and Section 1231...

Leilei operates a sole proprietorship, using the accrual basis of tax accounting. Last year, she claimed a $10,000 bad debt deduction for a receivable from Jackie. But this year, Jackie sent her a...

Sutcliffe Banton, dba Nemard Construction, furnished labor and materials (valued at $162,895) for improving Vicky Deafeamkpors New York City residential property. She paid only $41,718, leaving...

Smith & Smith, a U. S. computer firm, contracted to install a computer system for Volkswagen in the companys headquarters in Berlin, Germany. Smiths contract included the following liability...

This chapter included an example of a manufacturing firm that had problems with employee theft of tools. The company decided that it would search every employees lunch box at the end of each shift....

During the current year, Gnatcatcher, Inc., (E & P of $1 million) distributed $200,000 each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their...

Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Tax Basis Accounts receivable ..$ 32,000...

Dale Dyer, who was employed by National By-Products, Inc., was seriously injured at work as the result of a job-related accident. He agreed to give up his right to sue the employer for damages in...

Middleton Motors, Inc., a struggling Ford dealership in Madison, Wisconsin, sought managerial and financial assistance from Lindquist Ford, Inc., a successful Ford dealership in Bettendorf, Iowa....

What is the citation of a 1993 ALR annotation that discusses the admissibility of polygraph test results in an action for malicious prosecution? What Am. Jur. 2d evidence research references are...

Assume that Congress amends the tax law to provide for a maximum 20 percent rate on royalty income. Calculate the annual tax savings from this new preferential rate to each of the following...

Fresher Foods, Inc., orally agreed to purchase one thousand bushels of corn for $1.25 per bushel from Dale Vernon, a farmer. Fresher Foods paid $125 down and agreed to pay the remainder of the...

1. Under what doctrine discussed in this chapter might Buy-Mart be held liable for the tort committed by Watts? 2. What is the key factor in determining whether Buy-Mart is liable under this...

Bogash drew a check on National Safety Bank and Trust Co. payable to the order of Fiss Corp. At the request of Fiss Corp., the bank certified the check. The bank later refused to make payment on the...

Delta Corporation incorporates on January 7, begins business on July 10, and elects to have its initial tax year end on October 31. Delta incurs the following expenses between January and October...

Clark, who owned a vacant lot, and Bird, who was engaged in building houses, entered into an oral agreement by which Bird was to erect a house on the lot. Upon the sale of the house and lot, Bird was...

Milan purchased saffron extract, marketed as Americas Hottest New Way to a Flat Belly, online from Dr. Chen. The Web site stated that recently published studies showed a significant weight loss (more...

Janice Dempsey has just started her own tax preparation firm. She has leased office space in a building, and she is incorporating her business as a Subchapter S corporation under the Internal Revenue...

(Multiple-Choice Questions) 1. A principal will not be liable to a third party for a tort committed by an agent: A. Unless the principal instructed the agent to commit the tort B. Unless the tort was...

Timothy keeps a pet chimpanzee, which is thoroughly tamed and accustomed to playing with its owners children. The chimpanzee escapes, despite every precaution to keep it upon its owners premises. It...

Karl Allen and Renee Galzo choose to be the sole owners and managers of a financial services business, Allen-Galzo & Associates LLP. Allen holds the copyright to investment analysis software that he...

Mr. Gennone maintained a checking account at Peoples National Bank & Trust Company of Pennsylvania (Bank). Gennone noticed that he was not receiving his bank statements and canceled checks. When...

Dain's Diamond Bit Drilling purchased the following assets this year. Assume its taxable income for the year was $53,000 before deducting any 179 expense (assume no bonus depreciation but assume that...

(Multiple choice) 1. Which of the following aspects of fraud usually results in the largest savings? a. Fraud prevention. b. Fraud detection. c. Fraud investigation. d. It is impossible to tell. 2....

Aric Toll owns and manages the Balboa Island Village Inn, a restaurant and bar in Newport Beach, California. Anne Lemen owns the Island Cottage, a residence across an alley from the Inn. Lemen often...

Jane Richards was employed as the sole crane operator of Gale Corp. and held the part-time union position of shop steward for the plant. On May 15, Richards complained to OSHA concerning what she...

Sullivan sold t-shirts with the name Boston Marathon and the year of the race imprinted on them. The Boston Athletic Association (BAA) sponsors and administers the Boston Marathon and has used the...

Reggie wants to invest $10,000. His options are a. Gibraltar Corporation bonds with an annual interest rate of 8%. b. State of Hawaii bonds with an annual interest rate of 5%. c. Series EE savings...

Continue with the facts presented in Problem 33. In problem Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in...

During the current year, Zeta Corporation distributes the assets listed below to its sole shareholder, Susan. For each asset listed, determine the gross income recognized by Susan, her basis in the...

Go to this texts Web site at academic. cengage.com/blaw/clarkson and select Chapter 44. Click on Video Questions and view the video titled Advertising Communication Law: Bait and Switch. Then answer...

Basic Research, L. L. C., advertised its products on television networks owned by Rainbow Media Holdings, Inc., through an ad agency, Icebox Advertising, Inc. As Basics agent, Icebox had the express...

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...

The Hyperion Company has an authorized capital stock of one thousand shares with a par value of $100 per share, of which nine hundred shares, all fully paid, were outstanding. Having an ample...

Woodridge USA Properties, L. P., bought eighty- seven commercial truck trailers from Southeast Trailer Mart, Inc. (STM). Gerald McCarty, an independent sales agent who arranged the deal, showed...

Sarah came home one day to find significant water damage in her home. Apparently one of the hoses to her washing machine had worn out and split, spilling water all over the place. Over the next...

Craig Ferguson, an internal auditor for HHG Online Booksellers, had been investigating a case of embezzlement fraud for nearly two months. After searching personnel and company records, visiting with...

Rick Yurko frequently purchased lottery tickets from Phyllis Huisel at the coffee shop she operated. In February 1990, Yurko bought 100 scratchoff lottery tickets, which revealed instant winners when...

Roberta Santos, age 41, is single and lives at 120 San-borne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for...

Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2009. In 2010, the corporation had large profits and a surplus...

Costello hired Sagan to drive his racing car in a race. Sagans friend Gideon promised to pay Sagan $3,000 if she won the race. Sagan won the race, but Gideon refused to pay the $3,000. Gideon...

Jane Leeves declared voluntary Chapter 7 bankruptcy. The trustee included the following property in her bankruptcy estate: Janes wedding ring Janes computer for her consulting business that she...

Mark Womer and Brian Perry were members of the U.S. Navy and were stationed in Newport, Rhode Island. On April 10, Womer allowed Perry to borrow his automobile so that Perry could visit his family in...

Visit the Association of Certified Fraud Examiners (ACFE) Web site at www.acfe.com. Once you have logged on, explore the pages of the site and then answer the following questions: a. How many...

John, Lesa, and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contribute 20 percent. Nothing is decided about how profits will be...

1. Which of the following is not a control activity (procedure)? a. System of authorizations. b. Appropriate hiring procedures. c. Independent checks. d. Documents and records. e. All of the above...

For each of the following actions, indicate in which of the six steps (1 through 6) of the tax research process the action would occur. a. Discuss the details of the transaction with the client, to...

Recall our example of an investment of $100,000 in research that yields a pioneering invention that has no commercial value, and a subsequent investment of $50,000 in development that yields an...

L. B. Foster invited Tie and Track Systems Inc. to submit price quotes on items to be used in a railroad expansion project. Tie and Track responded by e-mail on August 11, 2006, with prices for 9...

Sally and Tom are married, have three dependent children, and file a joint return in 2015. If they have adjusted gross income (AGI) of $90,000 and itemized deductions of $10,000, what is their...

On March 20, Andy Small became seventeen years old, but he appeared to be at least twenty-one. (a) On April 1, he moved into a rooming house in Chicago where he orally agreed to pay the landlady $300...

On May 1, by telephone, Yu offers to hire Benson to perform personal services. On May 5, Benson returns Yus call and accepts the offer. Discuss fully whether this contract falls under the Statute of...

Grant, Arthur, and David formed a partnership for the purpose of betting on boxing matches. Grant and Arthur would become friendly with various boxers and offer them bribes to lose certain bouts....

Your small company produces and sells holsters for cell phones. During the past year, monthly inventory counts have shown about 100 holsters missing. Furthermore, a customer report gives you reason...

Ion Corporation has income tax expense/payable for book purposes of $200,000 and $250,000 for tax purposes. Assume that Ion will only be able to use $30,000 of any deferred tax asset with the balance...

Darin bought his fiancée Sarah a 3-carat diamond ring for $43,121 from Mandarin Gems. Later, Mandarin supplied Erstad with a written appraisal valuing the engagement ring at $45,500. Years...

Hosha exchanges all of her Leaf stock for Petal stock plus $5,000 cash. The exchange is pursuant to a tax-free reorganization. Hosha paid $25,000 for the Leaf stock five years ago. The Petal stock...

Phillips, Inc., a cash basis C corporation, completes $100,000 in sales for year 1, but only $75,000 of this amount is collected during year 1. The remaining $25,000 from these sales is collected...

Mini, Inc., earns pretax book net income of $750,000 in 2014. Mini deducted $20,000 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes. Mini records no other...

Jurisdiction Z levies an excise tax on retail purchases of jewelry and watches. The tax equals 3 percent of the first $1,000 of the purchase price plus 1 percent of the purchase price in excess of...

Look up Bush Brothers & Co., 73 T.C. 424 (1979) and answer the questions below. a. Was the case reviewed by the court? If so, was the decision unanimous? Explain. b. Was the decision entered under...

If Kolchek had negligently left Litisha alone in the spa prior to the incident described in the previous question, what defense to liability might Porter assert? Shalene Kolchek bought a Great Lakes...

Kendra Knight took part in a friendly game of touch football. She had played before and was familiar with football. Michael Jewett was on her team. In the course of play, Michael bumped into Kendra...

You manage a car dealership in a large city. Many of your sales employees are very successful and have purchased their own vehicles from your dealership. Your dealership finances the sale of some of...

Beck was the general manager of Chilkoot Lumber Co. Haines sold fuel to the company. To persuade Haines to sell on credit, Beck signed a paper by which he promised to pay any debt the lumber company...

Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the...

Mary is an employee of ABC corporation and incurs $3,600 of unreimbursed employment-related travel and entertainment expenses during the current year. These business expenses include the following:...

1. Did GFI have a legitimate reason to expect that Egan would accept the fourth shipment? Why or why not? 2. Does the substitution of carriers in the third shipment constitute a breach of the...

1. What is the term for the right of Roche citizens to walk across Shoepkes land on the trail? 2. What covenants would most courts infer were included in the warranty deed that was used in the...

Lauren, Matthew, and Susan form a partnership, with Lauren contributing $100,000; Matthew $50,000; and Susan her time and skill. Nothing is said regarding the division of profits. The firm later...

1. One of the advantages of the LLC is that its members enjoy limited personal liability for the companys obligations. In view of this fact, does the possibility that a court may hold an LLC member...

The basis of Jeromes partnership interest is $50,000. Jerome receives a pro rata liquidating distribution consisting of $10,000 cash, land with a basis of $40,000 and a fair market value of $60,000,...

Joan Ohlman, a patient in a hospital, refused medical treatment for her leg infection because she thought swelling was caused by a machine controlled by the President of United States. She told a...

Mona found a wallet on the floor of an elevator in the office building where she worked. She posted several notices in the building about finding the wallet, but no one appeared to claim it. She...

Jays Flying Advertising, LLC, contracted with Big Bobs Burger restaurant to fly an advertisement above the Connecticut beaches. The advertisement offered $5,000 to any person who could swim from the...

CEO Bernard Ellis sent a memo to shareholders of his Internet-related services business some four days before the expiration of a lock-up period during which these shareholders had agreed not to sell...

How is an offer terminated? Assuming that Durbin did not inform Amstel that he was rejecting the offer, was the offer terminated at any time described here? Explain. Shane Durbin wanted to have a...

Had the dealer engaged in deceptive advertising? Why or why not? Leota Sage saw a local motorcycle dealers newspaper advertisement for a MetroRider EZ electric scooter for $1,699. When she went to...

Suppose that Executive Aviation discovers that Air Ruidoso has sufficient assets in one of its bank accounts to pay the past-due amount. How might Executive Aviation attempt to obtain access to these...

PRM Energy Systems, Inc. (PRM), owned technology patents that it licensed to Primenergy to use and to sublicense in the United States. The agreement stated that all disputes would be settled by...

Tom, Angela, and Peter want to become co-owners of a business enterprise. Compare their personal liability for the debts incurred by the enterprise if they organize as: a. A general partnership. b. A...