Questions and Answers of Federal Taxation 2023 Comprehensive

On Form W-4, Virginia decided to request her employer withhold more taxes than she generally would have withheld.a. Is it permissible to request greater withholdings than an individual is entitled
Bart and Jane Lee are married, file a joint return and have one dependent child (age 9). Bart begins a new job and is asked to fill out a Form W-4. What are the important pieces of information that
Dana Dodson died October 31, 2020, with a gross estate of $16.7 million, debts of $200,000, and a taxable estate of $16.5 million. Dana made no taxable gifts. All of her property passed under her
Joan died April 17, 2021. Joan’s executor chose March 31 as the tax year end for the estate. The estate’s only beneficiary, Kathy, reports on a calendar year. The executor of Joan’s estate
Cate Cole died in 2019, and her will left her entire estate in equal shares to her two adult children, Calvin and Corrine. Both children anticipate being in the top income tax bracket for at least
Glorietta Trust is an irrevocable discretionary trust funded by Grant Glorietta. The discretionary income beneficiary for life is Grant’s son, Gordon Glorietta (single). Gordon is a partner in a
The following items are relevant for the first income tax return for the Ken Kimble Estate. Mr. Kimble, a cash method of accounting taxpayer, died on July 1, 2022.The record dates were June 14 for
A simple trust has the following receipts and expenditures for 2022. The trust instrument is silent with respect to capital gains, and state law concerning trust accounting income follows the Uniform
Refer to Problem C:14-45. Explain how your answers would change for each independent situation indicated below:a. At the end of the trust term, the property passes instead to Holly’s nephew
Holly funded the Holly Marx Trust in January 2022. The entire trust income is payable to her adult son Jack for 20 years. At the end of the twentieth year, the trust assets are to pass to Holly’s
A simple trust had a long-term capital loss of $10,000 for 2021 and a long-term capital gain of $15,000 for 2022. Its net accounting income and DNI are equal. Explain the tax treatment for the 2021
A trust has net accounting income of $24,000 and incurs a trustee’s fee of $1,000 in its principal account. What is its distribution deduction under the following situations: a. It distributes
Suellen Symmes died on January 15, 2022. Her estate elected a November 30 year end. The executor projects that the estate will receive interest income of $50,000 by November 30, 2022, and will have
Calculation of the Tax Liability. A complex trust has taxable income of $29,900 in 2022. The $29,900 includes $5,000 of rental income and $25,000 of taxable interest income, reduced by the $100
For the first five months of its existence (August through December 2021), the Estate of Amy Ennis had gross income (net of expenses) of $7,000 per month. For January through July 2022, the executor
Art Rutter sold an apartment building in May 2022 for a small amount of cash and a note payable with payments beginning in 2022. Principal and interest payments are due annually on the note in April
Joy died on November 5, 2022. Soon after Joy’s death, the executor discovered the following insurance policies on Joy’s life.Joy transferred ownership of policies 757 and 848 to her son in 2011.
A trust instrument provides that, for life, Irene is entitled to receive distributions of income only and Beth is to receive the remainder interest. The trust sells property at a gain. Income and
Len and Christy Vole, ages 42 and 39 respectively, are married and file jointly in 2021. Len is a contractor operating as a sole proprietorship (EIN 11-1111111). Christy is employed, earning $24,000
Jackson Corporation prepared the following book income statement for its year ended December 31, 2022:• For tax: Seven-year MACRS property for which the corporation made no Sec. 179 election in the
At the close of business on May 31, 2022, Alaska Corporation exchanges $2 million of its voting common stock for all the noncash assets of Tennessee Corporation. Tennessee uses its cash to pay off
Lean Corporation was incorporated in 2016 by Bruce Smith, who has served as an officer and member of the Board of Directors. Carl Jones has served as the secretary-treasurer of the company as a
In 2022, Ace Corporation reports gross income of $200,000 (including $150,000 of profit from its operations and $50,000 in dividends from less-than-20%-owned domestic corporations) and $230,000 of
Murray Corporation’s stock is owned by about 1,000 shareholders, none of whom own more than 1% of the outstanding shares. Pursuant to a tender offer, Said, an individual investor, purchased all the
In 2022, Sondra makes taxable gifts aggregating $300,000. Her only other taxable gifts amount to $200,000, all of which she made in 1997.a. What is Sondra’s 2022 gift tax liability?b. What is her
Refer to the facts of Problem C:12-36 and assume the current year is 2022. Emily’s prior gifts are as follows:What is Emily’s current year gift tax liability? Year 1974 1998 Amount of Taxable
Amir made taxable gifts as follows: $800,000 in 1975, $1.2 million in 1999, and $600,000 in 2022. What is Amir’s gift tax liability for 2022?
In March 2022, Marge (age 67) engages in the following transactions. Determine the amount of the completed gift, if any, arising from each of the following events. Assume 4% is the applicable
In 2022, Henry and his wife, Wendy, made the gifts shown below. All gifts are of present interests. What is Wendy’s gift tax payable for 2022 if the couple elects gift splitting and Wendy’s
During 2022, Will gives $40,000 cash to Will, Jr. nd a remainder interest in a few acres of land to his friend Suzy. The remainder interest is valued at $32,000. Will and his wife, Helen, elect gift
In earlier years, neither Hugo nor Wanda, his wife, made any taxable gifts. In 2021, Hugo gave $15,000 cash to each of his nieces, nephews, and grandchildren, 30 individuals in total. In 2022, Wanda
In June 2021, Karen transferred property with a $75,000 FMV and a $20,000 adjusted basis to Hal, her husband. Hal dies in March 2022; the property has appreciated to $85,000 in value by then. His
In March 2022, Ginger Graham, age 46 and wife of Greg Graham, engaged in the transactions described below. Determine Ginger’s gift tax liability for 2022 if she and Greg elect gift splitting and
Ned Norris, a widower, engaged in the transactions described below during 2021. He made only one earlier taxable gift, $1.2 million in 2014. Use this information to prepare a 2021 gift tax return
Annie James died early in 2022. All her property passed subject to her will, which provides that her surviving husband, Dave James, is to receive all the property outright. Her will further states
Beth died on May 3, 2022. Her executor elected date-of-death valuation. Beth’s gross estate included, among other properties, the items listed below. What is the estate tax value of each
Sue died on May 3, 2022. On October 1, 2018, Sue gave her son Tom land valued at $17,015,000. Sue applied a unified credit of $4,417,800 against the gift tax due on this transfer. On Sue’s date of
Mary died on April 3, 2022. As of this date, Mary’s gross estate was valued at $16.5 million. On October 3, Mary’s gross estate was valued at $15.8 million. The estate neither distributed nor
Val died on May 13, 2022. On July 3, 2019, she gave a $400,000 life insurance policy on her own life to son Ray. Because the value of the policy was relatively low, the transfer did not cause any
In December 2019, Jody transferred stock having an $16,115,000 FMV to her daughter Joan. Jody paid $1,880,000 ($6,385,800 2 $4,505,800) of gift taxes on this transfer. When Jody died in January 2022,
In December 2019, Curt and Kate elected gift splitting to report $32,230,000 of gifts of stocks Curt made to Curt, Jr. Each paid gift taxes of $1,968,000 by spending his or her own funds. Kate died
John died in 2022. What amount, if any, was included in his gross estate in each of the following situations:a. In 2007, John created a revocable trust, funded it with $400,000 of assets, and named a
Twelve years ago, Latoya transferred property to an irrevocable trust with a bank trustee. Latoya named Al to receive the trust income annually for life and Pat or Pat’s estate to receive the
When Yuji died in March 2022, his gross estate was valued at $15 million. He owed debts totaling $300,000. Funeral and administration expenses were $12,000 and $120,000, respectively. Yuji willed his
Ten years ago, Art purchased land for $60,000 and immediately titled it in the names of Art and Bart, joint tenants with right of survivorship. Bart paid no consideration. In 2022, Art died and was
Will, a bachelor, died in 2022. At that time, his sole asset was cash of $15 million. Assume no debts or funeral and administration expenses and no charitable bequests. His gift history was as
Elaine died on May 1, 2022. Her gross estate consisted of the following items:Elaine’s Sec. 2053 deductions totaled $200,000. She had no other deductions.a. What percentage of Elaine’s federal
Assume the same facts as in Problem C:13-48 and that before Yuji’s death in 2022 his wife already owned property valued at $300,000. Assume that each asset owned by each spouse increased 8% in
Sam Snider died February 14, 2020, survived by his spouse Janet and several children. Sam had not made any taxable gifts. Sam’s gross estate was $7 million. In each of the following independent
Bess, a widow, died in October 2022. Her gross estate, which totaled $12.5 million, included a $100,000 life insurance policy on her life that she gave away in 2019. The taxable gift that arose from
Maria Martinez died in 2022, survived by her spouse, Sergio, and two adult children. Her gross estate, all of which passed under her will, was valued at $17.2 million. She had Sec. 2053 deductions of
Joseph Jernigan died in 2022 with a taxable estate of $14.1 million. He was survived by his spouse Josephine and several children. He made taxable gifts of $100,000 in 1974 and $650,000 in 2000. The
Jeung Hong, a widower, died in March 2022. His gross estate was $14.5 million and, at the time of his death, he owed debts of $60,000. His will made a bequest of $200,000 to his undergraduate alma
Giovanni died in 2022 with a gross estate of $13.9 million and debts of $30,000. He made post-1976 taxable gifts of $100,000, valued at $80,000 when Giovanni died. His estate paid state death taxes
Bonnie died on June 1, 2022, survived by her husband, Abner, and two sons, Carl and Doug. Bonnie’s only lifetime taxable gift was made in October 2020 in the taxable amount of $13.25 million. She
Gaylord Gunnison (GG) died January 13, 2022, and his gross estate consisted of three properties—cash, land, and stock in a public company. The amount of cash on the date of his death was $10.9
Matt Patterson died in early 2022 with a $16.5 million gross estate and no deductions other than a potential marital deduction. He bequeathed all his property to his spouse, Nancy, with the provision
Prepare an estate tax return (Form 706) for Adam Zugg of 45 Cornfield Place, Midwest City, IL 60000. Adam died October 31, 2021. He was survived by his wife, Callie, and their son, Zebulon. At the
Your client is Jon Jake, the executor of the Estate of Beth Adams, a widow. Mrs. Adams died 11 years after the death of her husband, Sam. Mr. Jake seeks assistance in the preparation of the estate
Arthur Zolnick died at age 84 on December 7, 2022. In March 2017, he transferred $4 million of stock to a charitable remainder annuity trust (CRAT) from which he named himself to receive $200,000 per
Permetemp Corporation (EIN: XX-1234567) formed in 2020 and, for that year, reported he following book income statement and balance sheet, excluding the federal income tax expense, deferred tax
Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The corporation uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of
Mike Barton owns Barton Products, Inc. The corporation has 30 employees. Barton Corporation expects $800,000 of net income before taxes in 2022. Mike is married and files a joint return with his
Doug is a single taxpayer. In 2021, he had wage income of $115,000 from his employer. In addition to his wage income, Doug was a consultant in which he made an additional $75,000 of net income from
Barbara was divorced two years ago. However, the final property settlement and determination of alimony payments was not made until February 2022 because of extended litigation. Barbara received a
Explain the difference between closed-fact and open-fact situations.
What are the Sec. 351 reporting requirements?
Delta Corporation incurs a $100,000 NOL in 2022. In 2023, the corporation reports the following items:Even though the numbers in this problem are small, assume that Delta does not qualify for the
Zeta Corporation’s taxable income for 2021 was $1.1 million, on which Zeta paid federal income taxes of $231,000. Zeta estimates calendar year 2022’s taxable income to be $2 million, on which it
Wright Corporation’s taxable income for calendar years 2019, 2020, and 2021 was $120,000, $150,000, and $100,000, respectively. Its total tax liability for 2021 was $21,000. Wright estimates that
Molly, whose tax rate is 37%, sells an apartment complex for $4.5 million with 10% of the price allocated to land. The apartment complex was purchased in 1994. She has no other sales or exchanges
No, the alternative minimum tax does not apply if an individual's tentative minimum tax is less than his regular tax liability. It applies only if the tentative minimum tax exceeds the regular tax
Which of the following are tax preference items for purposes of computing the individual AMT?a. Net long-term capital gainb. Excess depreciation for real property placed in service before 1987c.
Alice is a single mother, 37 years old, and has two qualifying children, ages 3 and 6. In 2022, she earns $25,000 in wages resulting in $25,000 of AGI. Is Alice eligible for the earned income credit?
What is backup withholding? What is its purpose?
Vincent anticipates that his actual tax liability for the tax year will be $12,000 and that federal income taxes withheld from his salary will be $9,000. Thus, when he files his current year income
William and Maria Smith are a married couple filing jointly. They have no children and report the following items in 2022:a. What is the Smith’s AMT liability?b. What would be William’s AMT
Jose, an unmarried taxpayer filing single with no dependents, has AGI of $600,000 and reports the following items in 2022:What is Jose’s AMT liability for 2022? Taxable income Tax preferences AMT
Dylan is a single taxpayer with $600,000 of taxable income, which results in a regular tax liability of $184,955 in 2022. Dylan is extremely cautious about being subject to AMT and wants to know how
Allen, an unmarried taxpayer filing single, has no dependents and reports the following items on his 2022 federal income tax return:a. What is the amount of Allen’s AMT adjustments related to
Amelia has wages of $45,000 and net income from a small unincorporated business of $70,000 for 2022.a. What is the amount of Amelia’s self-employment (SE) tax and deduction for AGI for her SE
Arnie and Angela are married and file a joint return in 2022. Arnie is a partner in a public accounting firm. His share of the partnership’s income in the current year is $40,000, and he receives
Anita, a single taxpayer, reports the following items for 2022:a. What is the amount of Anita’s self-employment tax?b. How would your answer to Part a change if Anita’s salary were $160,000?
In each of the following independent situations, determine the amount of the child and dependent care tax credit. (Assume that both taxpayers are employed and the year is 2022.)a. Brad and Bonnie are
Brad and Valerie decided to adopt a child and contacted an adoption agency in August 2021. After extensive interviews and other requirements (such as financial status, etc.), Brad and Valerie were
Lou and Stella North are married, file a joint return, and have two dependent children in college, Phil and Jaci. Phil attends a State University in a neighboring state, and Jaci attends a State
Carolyn is unmarried and has one dependent child, age 6, who lived with her for the entire year. In 2022, she has income of $16,000 in wages and $6,000 of unearned income (none of which was
Jose is unmarried with no qualifying children. He has $9,500 of 2022 wages and is otherwise eligible for the earned income credit. Jose has $200 of interest income and no for AGI deductions.a. What
Latisha is an unmarried taxpayer, filing head of household. She has two dependent children (7-year-old twins) who lived with her all year. Her 2022 earned income was $18,600, her AGI was $22,700, and
Reagan and Grady Wade are married with three qualifying children under the age of 17. In 2021, Reagan and Grady had earned income of $50,000 and no adjustments. Line 11 of their 1040 reports AGI of
Milton (SSN 111-22-1111) is 66 years old and unmarried, filing single with no dependents. He had no transactions involving any virtual currency during the year. He had the following income and
Mike, a self-employed consultant, incurs the following business-related expenses in 2022:Actual automobile expenses....................................................................$ 2,500Moving
a. Keith Thomas and Trent Brooks began a new consulting business on January 1, 2022. They organized the business as a C corporation, KT, Inc. During 2022, the corporation was successful and generated
In 2022, Paul, who is single, has a comfortable salary from his job as well as income from his investment portfolio. However, he is habitually late in filing his federal income tax return. He did not
In April 2022, Dan is audited by the IRS for the year 2020. During the course of the audit, the agent discovers that Dan’s deductions for business travel are unsubstantiated and a $600 deficiency
The following information relates to Tom, a single taxpayer, age 18:Wages....................................................$7,000Taxable interest income...........................425Itemized
Wes and Tina are a married couple and provide financial assistance to several persons during the current year. For the situations below, determine whether the individuals qualify as Wes and Tina’s
Robert provides more than half of the support for his daughter, Jane, and her two children. Jane earned $20,000.Robert, whose AGI is $160,000, paid the rent of $11,000 on Jane’s apartment and
Determine which of Schedules 1 through 3 the taxpayer(s) will file with Form 1040 for each case:a. Abby and Bert are married, file a joint tax return, and have two qualifying children (ages 4 and 8).
How many dependents does the taxpayer have, assuming the people involved are U.S. citizens? What amount of credit may be claimed for the taxpayer’s dependents?a. Andrew supports his cousin Mary,

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