Taxation

1) To whom does Circular 230 apply? 2) What are the suggested best practices for tax advisors? 3) Can the IRS penalize practitioners under Circular 230? Explain

Tax savings strategies for a small business

My wife comes to me with the following tax saving strategies: Computer Consulting received $7900 from customers in the last week of December. Can she just hold on to the money and include it in January 2005 receipts? She would like to purchase a car in the name of Computer Consulting. What are his options? She would like to employ Jim and Rosa in his computer business. Comment on whether these would be good tax strategies.

Property Transaction: Capital gains and losses

Sarah sells short 100 shares of A stock at $20 per share on January 15, 2006. She buys 200 shares of A stock on April 1, 2006, at $25 per share. On May 2, 2006, she closes the short sale by delivering 100 of the shares purchased on April 1. a. What are the amount and nature of Sarah's loss upon closing the short sale? b. When does the holding period for the remaining 100 shares begin? c. If she sells (at $27 per share) the remaining 100 shares on January 20, 2007, what will be the nature of her gain or loss?

Explain how Kevin and Janet took advantage of existing IRS rules to reduce taxes

Practically every line of Kevin and Janet’s form 1040 can be used for tax planning. They had total income of $98,771 and paid federal income tax of $6,838 or 7%. Additionally, Kevin had income from his business of $48,040 and paid self-employment tax of $7,001 or 15%. Explain how Kevin and Janet took advantage of existing IRS rules to reduce taxes in the following areas: capital gains/losses passive gains/losses IRA deduction 401K deduction home ownership noncash contributions gambling losses

Property transactions: Nontaxable exchanges

Sarah owns undeveloped land (basis of $350K) held as an investment. On October 7, 2006, she exchanges the land with her 27-year-old daughter, Ellen for other undeveloped land also to be held as an investment. The appraised value of Ellen's land is $500K. a. On February 15, 2007, Sarah sells the land to Jeff, a real estate broker, for $600K. Calculate Sarah's realized and recognized gain or loss from the exchange with Ellen and on the subsequent sale of the land to Jeff. My answer is ....... Sarah's realized and recognized gain is $250,000 from the exchange with Ellen and on the subsequent sale of the land to Jeff. Is that right? b. Calculate Sarah's realized and recognized gai... click for more