A client is under the impression that a donor cannot incur a gift tax liability if he or she makes gifts to only U.S. charitable organizations. What should you say to the client?

ETHICS: Fifteen-year-old Terri Stubblefield was riding in the backseat of a Ford Mustang II when the car was hit from behind. The Mustang was engulfed in a ball of fire, and Terri was severely...

Terminal Grain Corporation brought an action against Glen Freeman, a farmer, to recover damages for breach of an oral contract to deliver grain. According to the company, Freeman orally agreed to two...

Adams, a consulting engineer, entered into a partnership with three others for the practice of their profession. The only written partnership agreement is a brief document specifying that Adams is...

1. Does the national Do Not Call Registry adversely affect the way that business is conducted in this country? If so, how? Should Congress enact a Do Not Spam law? Why or why not? 2. If 90 percent of...

Greg Company agreed to pay Ms. Bilko $45,000 compensation for services performed for the company. a. Compare the income tax consequences to Greg and Ms. Bilko if she is an employee or if she is an...

Joe Bacillus owns Bacilluss Italian Restaurant. A friend of Joes who owns a sports bar comes to Joe and wants to form a partnership with Joe to buy an old building, renovate it, and then move both...

Jetex, an accrual basis, calendar year Corporation, engages in the business of long-distance freight hauling. Every year, Jetex is required to purchase several hundred permits and licenses from state...

MRT, a calendar year corporation, placed the following assets in service this year: a. Compute MRTs MACRS depreciation with respect to the assets placed in service this year. Assume MRT does not...

The Logan Wright Foundation (LWF), an Oklahoma corporation, was a partner in a partnership formed to operate two Sonic Drive-In restaurants. LWF argued that it was not responsible for Sonics taxes...

Langstraat, age seventeen, owned a motorcycle that he insured against liability with Midwest Mutual Insurance Company. He signed a notice of rejection attached to the policy indicating that he did...

Ames, Bell, Cain, and Dole each orally ordered LCD televisions from Marvel Electronics Company, which accepted the orders. Amess television was to be encased in a specially designed ebony cabinet....

You own a local pizza delivery store. Cesar Rodriquez has been working for you as a manager for two years and has been a close friend of yours. Cesar has the reputation of being a hard worker and has...

Indigo Corporation wants to transfer cash of $150,000 or property worth $150,000 to one of its shareholders, Linda, in a redemption transaction that will be treated as a qualifying stock redemption....

A drug company applied for the approval of the Food and Drug Administration (FDA) to market a miracle drug that the company believed could cure some cancers. During the period that the application...

An investor in a 28% tax bracket owns land that is a capital asset with a $50,000 basis and a holding period of three years. The investor wishes to sell the asset at a price high enough so that he...

Jerry transfers property with a $28,000 adjusted basis and a $50,000 FMV to Texas Corporation for 75 shares of Texas stock. Frank, Jerrys father, transfers property with a $32,000 adjusted basis and...

Can an employer automatically exclude all applicants with conviction records? What if the policy was limited to felony convictions?

Bobby Jones, an accountant for ABC Corporation, has been suspected of committing fraud. Some information already gathered about the fraud points to Bobby Jones as the most likely perpetrator. In his...

THE ETHICAL DIMENSION Suppose that the defendant automaker had opposed this action solely to avoid paying for a car that had proved to be a lemon. Would this have been unethical? Explain. THE LEGAL...

Tomlinson and Hubbard were two of five shareholders in Multimedia Software Distributors, a corporation. The corporation was formed in 1992 and filed for bankruptcy in 1994. In 1996, Tomlinson filed a...

You are senior project manager for Superior Paper, Inc., a paper processing company with plants in several states. Recently, you have been given responsibility for overseeing the construction of a...

Identify the type of each of the following reorganizations. a. Briggs Corporation was originally incorporated in Georgia but now conducts most of its business in Florida. The firm transfers...

John purchased for cash a Revenge automobile manufactured by Japanese Motors, Ltd., from an authorized franchised dealer in the United States. The dealer told John that the car had a 24-month,...

Lyles sexual-harassment claim is based on the hostile work environment created by the writers sexually offensive conduct at meetings that she was required to attend. The writers, however, argue that...

Your colleague picks up the 2012 annual report of Microsoft (that we showed in Chapter 6) and finds that Microsoft reports an effective tax rate of 23.8% for fiscal year 2012 and 17.5% for fiscal...

Make a chart that distinguishes among the various types of examinations that the IRS conducts relative to individual income tax returns; namely, office, correspondence, field, and NRP audits. For...

The president of your CPA firms largest client, a medium-size manufacturing company, advises you that the firm is about to acquire its largest supplier. Both companies have been profitable for the...

The ABC Partnership made the following current distributions in the current year. The dollar amounts listed are the amounts before considering any implications of the distribution. The land Alonzo...

Li Li worked for Packard Bioscience, and Mark Schmeizl was her supervisor. In March 2000, Schmeizl told Li to call Packard's competitors, pretend to be a potential customer, and request "pricing...

Rohan, an eighty-three-year-old invalid, employs a nurse, Sarah, to care for him. Prior to Sarahs employment, Rohan executed a will leaving his entire estate to his only living relativehis...

Bold Corporation paid $25 to each full-time employee at year-end in recognition of the holidays. Bold Corporation is interested in whether the amounts are taxable income to its employees, and whether...

Brilles offered to sell his used automobile to Nevarro for $12,600 cash. Nevarro agreed to buy the car, gave Brilles a check for $12,600, and drove away in the car. The next day Nevarro sold the car...

Patient was injured when the footrest of an adjustable X-ray table collapsed, causing Patient to fall to the floor. G.E. manufactured the X-ray table and the footrest. At trial, evidence was...

If the nephew had not had a legal right to engage in the behavior that he agreed to forgo, would the result in this case have been different? Explain.

George Overton has plans for establishing a new business with Elena Costanza. They will both be managers, and each will take an annual salary of $50,000.The company will have other expenses of...

In 2005, Roland, who is single, purchased a personal residence for $340,000 and took out a mortgage of $200,000 on the property. In May of the current year, when the residence had a fair market value...

Sarah incorporates her small business but does not transfer the machinery and equipment used by the business to the corporation. Instead, the machinery and equipment are leased to the corporation for...

In December 20x1, Anns 12-year-old cousin, Susan, came to live with her after Susans parents met a sudden death in a car accident. In 20x2, Ann provided all normal support (e. g., food, clothing,...

Your client, Karen Kross, recently married Larry Kross. Karen is age 72, quite wealthy, and in reasonably good health. To date, she has not made any taxable gifts, but Larry made taxable gifts...

Why do internal control weaknesses help detect fraud?

Terrell Redman, a senior vice president of Alligator Corporation, is evaluating a potential acquisition for the company. The entity he wishes to acquire has several divisions, two of which...

Price Corporation has 100 shares of common stock outstanding. Price repurchased all of Pennys 30 shares for $35,000 cash during the current year. Three years ago, Penny received the shares as a gift...

Your client, John Butler, is an avid Houston Astros fan. Last March at the Astros' home opener, as a result of a random drawing of those in attendance at the game, John won 300 Shipley Do-Nut...

Gilman and colleagues (2008) measured general life satisfaction in 1,338 adolescents from two individualistic nations (Ireland, United States) and two collectivist nations (China, South Korea) using...

What is the term used for Hulas offer to purchase GVG stock? By what method did Hula acquire control over GVG? In November 2002, Mario Bonsetti and Rico Sanchez incorporated Gnarly Vulcan Gear, Inc....

On August 15, 2003, Wilbert Heikkila signed an agreement with Kangas Realty to sell eight parcels of Heikkilas property. On September 8, 2003, David McLaughlin met with a Kangas agent who drafted...

How is the data-driven, six-step detection approach relevant to e-business fraud detection?

Locket, a U.S. C corporation, makes a sale to a customer in Sustainia, a country that applies a 25% income tax to business profits. The customer found out about Locket through an Internet search....

An affiliated group has a consolidated NOL for the current year. What factors could determine whether it would be advantageous or disadvantageous for the group to elect to forgo the carryback of the...

Hewlett-Packard (HP) launched a workplace diversity campaign that consisted of hanging posters entitled Diversity Is Our Strength. Each poster depicted an HP employee above the caption Black, Blonde,...

Steven Taterka purchased a new Ford Mustang from a Ford dealer. More than two years later, after Taterka had put 75,000 miles on the car and Ford's express warranty had expired, he discovered that...

H.C. Blackwell Co. held a franchise from Kenworth Truck Co. to sell its trucks. After 12 years, the franchise was nearing expiration. Kenworth notified Blackwell that the franchise would not be...

Heather and her partners operate a profitable partnership. Because the business is expanding, the partners would like to transfer it to a newly created corporation. Heather is concerned, however,...

Compute the taxable income for 2014 for Emily on the basis of the following information. Her filing status is single. Salary ............................... $85,000 Interest income from bonds issued...

Dr. Diego Dissolution is recently divorced and has some questions regarding payments he is making to his ex-wife (Mrs. D.). Diego is 45 years old and has a successful dental practice. Mrs. D. was...

Mariel has a $60,000 basis in her partnership interest just before receiving a parcel of land as a liquidating distribution. She has no remaining precontribution gain and will receive no other...

Which standard of scrutiny, or test, would apply to this situation? Why? A state legislature enacted a statute that required any motorcycle operator or passenger on the states highways to wear a...

Milton Blankenship agreed in writing to buy 15 acres of Ella Mae Henrys junkyard property for $15,000 per acre with a ten-year option to buy the remaining 28.32 acres. Blankenship orally agreed to...

How would economics try to answer the question, Does crime increase or decrease as a society becomes more wealthy?

Eileen, a resident of Wyoming, goes to Montana to purchase her new automobile. She does this because Wyoming imposes a sales tax while Montana does not. Has Eileen successfully avoided the Wyoming...

In the summer of 2002, after several South Louisiana women had been murdered, the Multi-Agency Homicide Task Force was established to investigate these murders, believed to have been committed by an...

Just prior to his death, Jameson, a prominent attorney, was sued by a former client. The suit alleged malpractice on the part of Jameson and requested damages of $90 million. On filing the Form 706,...

During the audit of Mr. and Mrs. Jessels 2012 and 2013 tax returns, the revenue agent learned that they kept two sets of books for their sole proprietorship. A comparison of the two revealed that Mr....

Christina, who is single, purchased 100 shares of Apple Inc. stock several years ago for $3,500. During her year-end tax planning, she decided to sell 50 shares of Apple for $1,500 on December 30....

A statute requiring railroads to fence their tracks is construed as intended solely to prevent animals that stray onto the right-of-way from being hit by trains. B&A Railroad Company fails to fence...

Browne & Assoc., a San Francisco company, orders from U.S. Electronics, a New York company, ten thousand electronic units. Browne & Assoc.s order form provides that any dispute would be resolved by...

Graham owns a building having a fair market value of $120,000. She takes out a fire insurance policy from the Bentley Insurance Company for $72,000; the policy contains an 80 percent co-insurance...

Ruth carelessly parks her car on a steep hill, leaving the car in neutral and failing to engage the parking brake. The car rolls down the hill and knocks down an electric line. The sparks from the...

(Multiple Choice) 1. Which of the following methods of gathering documents is based primarily on luck? a. Documents discovered during audits. b. Hard-to-get private documents that are subpoenaed. c....

Numismatic Funding Corporation (Numismatic), with its principal place of business in New York, sells rare and collector coins by mail throughout the United States. Frederick R. Prewitt, a resident of...

1. a. How did Chase violate Regulation Z and the TILA? b. According to this decision, what is a clear and conspicuous disclosure? 2. Green Tree Financial financed Randolphs mobile home purchase....

Ben, Dan, and Lilli were partners sharing profits in proportions of one-fourth, one-third, and five-twelfths, respectively. Their business failed, and the firm was dissolved. At the time of...

Oliver uses his knowledge of computers and software to enter into, without authority, the databases of government agencies and private companies, which often never realize that their systems have...

In 2007, Charles Riegel and his wife sued a medical device manufacturer, Medtronic. Charles had a catheter produced by Medtronic placed in his coronary artery after he suffered a heart attack....

1. How is the principle of comity applied? 2. What considerations can take precedence over comity? 3. What interests were at stake in the dispute at the heart of this case? 4. Did this court apply...

The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her...

Gardner owned a quantity of corn, which was contained in a corncrib located on Gardners farm. On March 12, Gardner wrote a letter to Bassett stating that he would sell to Bassett all of the corn in...

Suppose that a court determined that Chase had aided Regal in willfully understating its tax liability. What is the maximum penalty that could be imposed on Chase? Superior Wholesale Corporation...

In the automobile industry, luxury-car customers are considered the most demanding segment of the market with respect to customer service. Jaguar Cars, a division of Ford Motor Co., is the exclusive...

What duties did Brock, as a director, owe to Firm Body? David Brock is on the board of directors of Firm Body Fitness, Inc., which owns a string of fitness clubs in New Mexico. Brock owns 15 percent...

Francis Gagnon, an elderly gentleman, signed a power of attorney authorizing his daughter, Joan, to sell any of my real estate and to execute any document needed to carry out the sale.and to add...

Congress passed the Inventors' Rights Act of 1999 to protect inventors from invention promotion scams. The Act authorized the Patent and Trademark Office (PTO) to publicize complaints it receives...

WHAT IF THE FACTS WERE DIFFERENT? Suppose that after Inn Foods learned of the investigation, the company told U.S. Customs and Border Protection that it was working to correct the errors and would...

Read the following case of Metropolitan Life Insurance Company v. Syntek Finance Corporation. The procedural issue is whether the trial court properly denied Syntek's motion for disqualification of...

The Sterling Trust owns a business and generated $100,000 in depreciation deductions for the tax year. Mona is one of the income beneficiaries of the entity. Given the following information, can Mona...

In which of the following situations would the taxpayer realize taxable income? a. A mechanic performs work on his own automobile. The mechanic would have charged a customer $400 for doing the same...

Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2016, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on...

If all financial statement amounts are presented appropriately, could financial statement fraud still be occurring?

Write a memo for the tax research file on the difference between "inbound" and "outbound" activities in the context of U.S. taxation of international income.

Bell Helicopter Textron, Inc., designs, makes, and sells helicopters with distinctive and famous trade dress that identifies them as Bell aircraft. Bell also owns the helicopters design patents....

On July 22, 2014, Lilac Corporation purchased 25% of the Coffee Corporation stock outstanding. Lilac Corporation purchased an additional 40% of the stock in Coffee on March 25, 2015, and an...

Suppose you are an employee of Pactruck who just received 10,000 shares of restricted stock that vest in 4 years. Your current and expected tax rate on ordinary income is 35% and on capital gains is...

Chris and Sue are 50 percent shareholders in the BackBone personal service corporation. BackBone provides chiropractic services in four small towns: Troy, Union, Vista, and Willow. Chris is the main...

You would probably not think of paying $1,000 for a $300 refrigerator, but it happens, especially when low-income people with little education sign contracts to buy appliances or furniture on time...

Jeffery Guerrero hired James McDonald, a certified public accountant, to represent him and his business in an appeal to the Internal Revenue Service. The appeal was about audits that showed Guerrero...

Carmine was allocated the following items from the Piccolo LLC for last year: Ordinary business loss Non-deductible penalties Tax-exempt interest income Short-term capital gain Cash distributions...

Randy Bocian had a bank account with First of America-Bank (FAB). On October 8, Bocian received a check for $28,800 from Eric Christenson as payment for constructing a pole barn on Christensons...

The plaintiff, Nemet Chevrolet, Ltd., is in the business of selling and servicing automobiles. The defendant, Consumeraffairs.com, Inc., operates a Web site where consumers can comment on the quality...

Betty joined Jim in forming DBJ Corp. Betty contributed appreciated land for 90 percent of the stock in DBJ Inc. Jim received 10 percent of the DBJ stock valued at $15,000. Determine Jim's tax...