Calculate Sally's AGI, Taxable Income and Income Tax

PROBLEM I Sally is age 28. Sally is single. Sally is a C.P.A. but has become disenchanted with the business world and she is taking some time to find herself. She has spent 2007 living with a series of friends. Although she has received some financial assistance from family members there is no person or group of people that qualify to claim her as a dependent for tax purposes. During 2007 she did some work as a self employed house cleaner. She had the following items for 2007. i. Received $10,400 for house cleaning. ii. Paid $1,875 in deductible transportation expenses. iii. Paid $3,125 in deductible cleaning supplies and equipment rentals. iv. Paid $1,900 for medical insura... click for more

Deduction amounts for depreciation and recapture

On June 26, 2004, Elaine purchased and placed into service a new computer system costing $8,000. The computer system was used 80 percent for business and 20 percent for personal use in both 2004 and 2005. Elaine claimed only regular MACRS depreciation. In 2006, the computer system was used 45 percent for business and 55 percent for personal use. Compute the depreciation deduction for the computer system in 2006 and the cost recovery recapture. Assume that in 2004, Elaine had instead expensed under Section 179 the cost of the computer system. Compute the cost recovery recapture in 2006.

Depreciation expense deductions & Realized and Recognized gains/losses

Sam Johnson started a small machine shop, Machines, Inc., in his garage and incorporated it in March of 2002 as a calendar-year corporation. At that time, he began using his personal computer and tools solely for the business as part of his contribution to the corporation. The computer cost $2,700 but had a fair market value of $900 only at conversion, and the tools, which had cost $1,500, were valued at $1,100. During 2002, Machines, Inc. purchased two machines, Machine A purchased on May 2 cost $24,000 and Machine B, purchased on June 5, cost $40,000. The corporation expensed Machine A under Section 179. The computer, tools, and Machine B were depreciated using accelerated MACRS, but no... click for more

Business and Taxation

1. For tax purposes, what is the best form of business entity to have? Why? 2. Is a budget always necessary in business? Why or why not? 3. Is a budget always necessary in personal money management? Why or why not? 4. Should individuals be taxed the same as business entities? Why or why not?

A comparation of the difference in total income tax for Georgia if her business was an S corporation as opposed to a C corporation with dividends/distributions.

I2-50 Computation of Tax. Georgia, a single taxpayer, operates a business that produces $100,000 of income before any amounts are paid to her. She has no dependents and no other income. She has itemized deductions of $18,000. Compute the total income tax that would be paid assuming the following additional facts. Ignore payroll taxes. a. Georgia operates the business as an S corporation receiving a salary from the corporation of $60,000. The corporation distributes all of its remaining income to the shareholders. b. She operates the business as a C corporation receiving a salary from the corporation of $60,000. The corporation distributes its after tax income to her as a di... click for more