For each of the following tax treatments, determine the concept, construct, or doctrine that provides the rationale
Question:
For each of the following tax treatments, determine the concept, construct, or doctrine that provides the rationale for the treatment:
a. During the current year, Trafalger Corporation pays $475,000 in estimated tax payments. Trafalger determines that its actual tax liability for is $490,000, so it pays only $15,000 with its tax return.
b. The Parsnip Partnership is an accrual basis taxpayer. During 2015, Parsnip deducted as a bad debt expense a $5,000 account receivable that it determined it could not collect. In 2016, Parsnip receives a $1,000 payment on the account. Parsnip must include the $1,000 in its 2016 gross income.
c. Kuri sells land for $30,000; its cost was $20,000. Under the sales agreement, the buyer is to pay Kuri's son $10,000 of the sales price. Kuri must recognize a gain of $10,000 on the sale.
d. Jevon owns 20% of the stock of Cowdery, Inc., an S corporation. During the current year, Cowdery reports income of $45,000 and pays no dividends. Jevon must include $9,000 in gross income.
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
Concepts In Federal Taxation 2017
ISBN: 9781305965119
24th Edition
Authors: Kevin E. Murphy, Mark Higgins