Accounting Periods & Methods - Moss Company

#2 Moss Company is a computer consulting firm. The company also sells equipment to its clients. The sales of equipment account for approximately 40% of the company’s gross receipts. The company has consistently used the cash method to report its income from services and the accrual method to report its income from the sale of inventory. In June of the current year Moss’s accountant discovered that as a small business the company qualifies to use the cash method for all of its activities. The company is a calendar year taxpayer. As of the beginning of the current year, the company had $60,000 of inventory on hand and $50,000 of accounts receivable from the sales of equipment and $40,00... click for more

Accounting Periods & Methods - Kelly

#3 On June 30, 2007, Kelly sold property for $250,000 cash on the date of sale and a $750,000 note due on September 30, 2008. No interest was stated in the contract. The present value of the mote (using 6.5%, which was the Federal rate) was $692,625. Kelly’s basis in the property was $400,000, and $40,000 of the gain was subject to depreciation recapture under § 1245. Expenses of the sale totaled $10,000, and Kelly was not a dealer in the property sold. a. Compute Kelly’s gain to be reported in 2007 b. Compute Kelly’s interest income for 2008

I2-59 Andrea, who is in the 35% tax bracket, is interested in reducing her taxes.

I2-59 Andrea, who is in the 35% tax bracket, is interested in reducing her taxes. She is considering several alternatives. For each alternative listed below, indicate how much tax, if any, she would save? a. Give $2,000 to a charity. Assume she itemizes. b. Give $2,000 to a charity. Assume she does not itemize. c. Make a gift of bonds valued at $8,000 yielding $600 of interest annually to her 15- year-old daughter who has no other income. d. Sell the bonds from part c for $8,000 and buy tax exempt bonds yielding $300

Partnerships: basis, gain/loss, interest

#1 Tom and Liz form an equal partnership with a cash contribution of $60,000 from Tom and a property contribution (adjusted basis of $75,000, fair market value of $60,000) from Liz a) How much gain or loss, if any does Liz realize on the transfer? May Liz recognize any gain or loss? b) What is Tom’s basis in his partnership interest? c) What is Liz’s basis in her partnership interest? d) What basis does the partnership take in the property transferred by Liz? e) Are there more effective ways to structure the formation?

partnerships/practice problem: separately stated items of income and expense plus basis calculations

#8 #4 The RB Partnership is owned equally by Rob and Bob, Bob’s basis is $14,000 at the beginning of the tax year. Rob’s basis is $9,000 at the beginning of the year. RB reported the following income and expenses for the current tax year: Sales revenue $130,000 Cost of sale 45,000 Guaranteed payment to Rob 24,000 Depreciation expense 12,500 Utilities 15,000 Rent expense 16,000 Interest income 3,000 Tax-exempt interest income 4,500 Payment to Mount Vern... click for more