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ACC 401 Week 3 - $20.00

ACC 401 Week 3

ACC 401 Week 3 Quiz
Assignment
Real Estate for Home and Business. From Chapter 6, complete Problem 39 and Problem 43. From Chapter 7, complete Problem 49 and Problem 51. From Chapter 8, complete Problem 37 and Problem 38.
Chapter 6, complete Problem 39 and Problem 43
39.  David is a college professor who does some consulting work on the side.  He uses 25% of his home exclusively for the consulting practice.  He is single and 63 years old.  His AGI (without consideration of consulting income) is $45,000.  Other information follows:
Income from consulting business            $4,000
Consulting expenses other than home office          1,500
Total costs relating to home:           
Interest and taxes                  6,500
Utilities                      1,500
Maintenance and repairs                 450
Depreciation (business part only)          1,500
Calculate David’s AGI.                 
43.  Janet purchased her personal residence in 2001 for $250,000.  In January 2010 she converted it to rental property.  The fair market value at the time of conversion was $210,000. 
a.  Determine the amount of cost recovery that can be taken in 2010:_________________
b.  Determine the amount of cost recovery that could be taken in 2010 if the fair market value of the property were $350,000:_____________________
Chapter 7, complete Problem 49 and Problem 51
49.   Ricardo acquired a warehouse for business purposes on August 30, 1992.  The building cost $400,000.  He took $226,900 of depreciation on the building, and then sold it for $500,000 on July 1, 2010.  What are the amount and nature of Ricardo’s gain or loss on the sale of the warehouse?
51. In 2010, Rosalva sold stock considered short-term for a gain of $875 and stock considered long-term for a loss of $3,400.  She also had a $3,000 short-term loss carryover from 2009 and a $1,240 long-term loss carryover from 2009.
a. What amount will be shown as a short-term gain (loss) for 2010?
b. What amount will be shown as a long-term gain (loss) for 2010?
c. Will there be a carryover to 2011?  If so, what are the nature and amount of the carryover?
d. Prepare a Schedule D. (Detailed stock information has been omitted; use reasonable assumptions.) 
Chapter 8, complete Problem 37 and Problem 38
37.  Matt and Marie own a vacation home at the beach.  During the year, they rented the house for 42 days (6 weeks) at $890 per week and used it for personal use for 58 days.  The total costs of maintaining the home are as follows:

Mortgage interest    $4,200
Property taxes             700
Insurance          1,200
Utilities          3,200
Repairs          1,900
Depreciation          5,500

a.  What is the proper tax treatment of this information on their tax return using the Tax Court method?
b.  Is there an option for how to allocate the expense between personal and rental use?  Explain.
c.  What is the proper tax treatment if Matt and Marie rented the house for only 14 days?
38.  Janet owns a home at the lake.  She incurs the following expenses:

Mortgage interest        $1,300
Property taxes                 800
Insurance              1,500
Utilities              1,800
Repairs                 300
Depreciation              4,000

What is the proper treatment of these expenses in each of the following cases?  Use the Tax Court allocation method, if applicable.

Case    Rental Income    Days Rented    Personal Use Days
A    $9,000    45    10
B    12,000    55    25
C      6,000    10    30
D    22,000    365    0

Discussion Questions
Self-Employed Business Income & Capital Gains. From Chapter 6, complete discussion question 1, question 2, question 9, and question 15 and post to the discussion board by day 3. From Chapter 7, complete question 1, question 2, question 8, and question 12.
Chapter 6, complete discussion question 1, question 2, question 9, and question 15
1.  Discuss the definition of a trade or business.  Why does it matter whether a taxpayer is classified as an employee or as self-employed?
2.  Discuss the concepts of ordinary, necessary, and reasonable in relation to trade or business expenses.
9.  Discuss the concept of electing §179 expense.  Does the election allow a larger expense deduction in the year of asset acquisition?
15.  Why were the hobby loss rules established?  What factors determine whether an activity is a trade or business or a hobby?  Is any one factor controlling?
Chapter 7, complete question 1, question 2, question 8, and question 12
1.   How are the terms basis, adjusted basis, and fair market value defined as they apply to the calculation of gains and losses?
2.  What is meant by the terms realized gain (loss) and recognized gain (loss) as they apply to the sale of assets by a taxpayer?
8.  What are the different classifications of capital assets?  Define each classification and explain the difference in the preferential tax treatment (the rate at which the gains are taxed).
12.  How is a net capital loss treated?  Include in your answer a discussion of how a net capital loss is treated in relation to other income.
Rental Property & Royalties. From Chapter 8 complete problem 33, problem 34, and problem 35 and post to the discussion board by day 3.
33.  Ramone is a tax attorney and he also owns an office building that he rents for $8,500/month.  He is responsible for paying all taxes and expenses relating to the building’s operation and maintenance.  Is Ramone engaged in the trade or business of renting real estate?
34.  Kelvin owns and lives in a duplex.  He rents the other unit for $750 per month.  He incurs the following expenses during the current year for the entire property:

Mortgage interest                $7,500
Property taxes                      2,000
Utilities                      1,500
Fixed light fixture in rental unit             100
Fixed dishwasher in personal unit             250
Painted entire exterior                  1,300
Insurance                      1,800
Depreciation (entire structure)          7,000
How are the expenditures treated for tax purposes?  On what tax form(s) are these amounts reported?
35.  In the current year, Sandra rented her vacation home for 75 days, used it for personal use for 22 days, and left it vacant for the remainder of the year.  Her income and expenses are as follows:

Rental income            $15,000
Real estate taxes            2,000
Utilities                1,500
Mortgage interest            3,800
Depreciation                7,200
Repairs and Maintenance        1,300

What is Sandra’s net income or loss from the activity?  Use the Tax Court method. 

ACC 401 Week 3 Assignment Real Estate for Home and Business - $10.00

ACC 401 Week 3 Assignment Real Estate for Home and Business

Assignment
Real Estate for Home and Business. From Chapter 6, complete Problem 39 and Problem 43. From Chapter 7, complete Problem 49 and Problem 51. From Chapter 8, complete Problem 37 and Problem 38.
Chapter 6, complete Problem 39 and Problem 43
39.  David is a college professor who does some consulting work on the side.  He uses 25% of his home exclusively for the consulting practice.  He is single and 63 years old.  His AGI (without consideration of consulting income) is $45,000.  Other information follows:
Income from consulting business            $4,000
Consulting expenses other than home office          1,500
Total costs relating to home:            
Interest and taxes                  6,500
Utilities                      1,500
Maintenance and repairs                 450
Depreciation (business part only)          1,500
Calculate David’s AGI.                  
43.  Janet purchased her personal residence in 2001 for $250,000.  In January 2010 she converted it to rental property.  The fair market value at the time of conversion was $210,000.  
a.  Determine the amount of cost recovery that can be taken in 2010:_________________
b.  Determine the amount of cost recovery that could be taken in 2010 if the fair market value of the property were $350,000:_____________________
Chapter 7, complete Problem 49 and Problem 51
49.   Ricardo acquired a warehouse for business purposes on August 30, 1992.  The building cost $400,000.  He took $226,900 of depreciation on the building, and then sold it for $500,000 on July 1, 2010.  What are the amount and nature of Ricardo’s gain or loss on the sale of the warehouse?
51. In 2010, Rosalva sold stock considered short-term for a gain of $875 and stock considered long-term for a loss of $3,400.  She also had a $3,000 short-term loss carryover from 2009 and a $1,240 long-term loss carryover from 2009.
a. What amount will be shown as a short-term gain (loss) for 2010?
b. What amount will be shown as a long-term gain (loss) for 2010?
c. Will there be a carryover to 2011?  If so, what are the nature and amount of the carryover?
d. Prepare a Schedule D. (Detailed stock information has been omitted; use reasonable assumptions.)  
Chapter 8, complete Problem 37 and Problem 38
37.  Matt and Marie own a vacation home at the beach.  During the year, they rented the house for 42 days (6 weeks) at $890 per week and used it for personal use for 58 days.  The total costs of maintaining the home are as follows:

Mortgage interest    $4,200
Property taxes             700
Insurance          1,200
Utilities          3,200
Repairs          1,900
Depreciation          5,500

a.  What is the proper tax treatment of this information on their tax return using the Tax Court method?
b.  Is there an option for how to allocate the expense between personal and rental use?  Explain.
c.  What is the proper tax treatment if Matt and Marie rented the house for only 14 days?
38.  Janet owns a home at the lake.  She incurs the following expenses:

Mortgage interest        $1,300
Property taxes                 800
Insurance              1,500
Utilities              1,800
Repairs                 300
Depreciation              4,000

What is the proper treatment of these expenses in each of the following cases?  Use the Tax Court allocation method, if applicable.

Case

Rental Income

Days Rented

Personal Use Days

A

$9,000

45

10

B

12,000

55

25

C

6,000

10

30

D

22,000

365

0

 

ACC 401 Week 3 DQ1 - $7.50

ACC 401 Week 3 DQ1

Self-Employed Business Income & Capital Gains. From Chapter 6, complete discussion question 1, question 2, question 9, and question 15 and post to the discussion board by day 3. From Chapter 7, complete question 1, question 2, question 8, and question 12.
Chapter 6, complete discussion question 1, question 2, question 9, and question 15
1.  Discuss the definition of a trade or business.  Why does it matter whether a taxpayer is classified as an employee or as self-employed?
2.  Discuss the concepts of ordinary, necessary, and reasonable in relation to trade or business expenses.
9.  Discuss the concept of electing §179 expense.  Does the election allow a larger expense deduction in the year of asset acquisition?
15.  Why were the hobby loss rules established?  What factors determine whether an activity is a trade or business or a hobby?  Is any one factor controlling?

ACC 401 Week 3 DQ2 - $7.50

ACC 401 Week 3 DQ2

Chapter 7, complete question 1, question 2, question 8, and question 12
1.   How are the terms basis, adjusted basis, and fair market value defined as they apply to the calculation of gains and losses?
2.  What is meant by the terms realized gain (loss) and recognized gain (loss) as they apply to the sale of assets by a taxpayer?
8.  What are the different classifications of capital assets?  Define each classification and explain the difference in the preferential tax treatment (the rate at which the gains are taxed).
12.  How is a net capital loss treated?  Include in your answer a discussion of how a net capital loss is treated in relation to other income.
Rental Property & Royalties. From Chapter 8 complete problem 33, problem 34, and problem 35 and post to the discussion board by day 3.
33.  Ramone is a tax attorney and he also owns an office building that he rents for $8,500/month.  He is responsible for paying all taxes and expenses relating to the building’s operation and maintenance.  Is Ramone engaged in the trade or business of renting real estate?
34.  Kelvin owns and lives in a duplex.  He rents the other unit for $750 per month.  He incurs the following expenses during the current year for the entire property:

Mortgage interest                $7,500
Property taxes                      2,000
Utilities                      1,500
Fixed light fixture in rental unit             100
Fixed dishwasher in personal unit             250
Painted entire exterior                  1,300
Insurance                      1,800
Depreciation (entire structure)          7,000
How are the expenditures treated for tax purposes?  On what tax form(s) are these amounts reported?
35.  In the current year, Sandra rented her vacation home for 75 days, used it for personal use for 22 days, and left it vacant for the remainder of the year.  Her income and expenses are as follows:

Rental income            $15,000
Real estate taxes            2,000
Utilities                1,500
Mortgage interest            3,800
Depreciation                7,200
Repairs and Maintenance        1,300

What is Sandra’s net income or loss from the activity?  Use the Tax Court method. 

ACC 401 Week 4 - $20.00

ACC 401 Week 4

ACC 401 Week 4 Quiz
Assignment
Tax Credits and Deductions. From Chapter 9, complete Problem 42 and problem 49. From Chapter 10, complete problem 49 and problem 57. From Chapter 11, complete problem 49 and problem 52.
Chapter 9, complete Problem 42 and problem 49
42.  Tim and Martha paid $7,900 in qualified employment-related expenses for their three young children who live with them in their household.  Martha received $1,800 of dependent care assistance from her employer, which was properly excluded from gross income.  The couple had $57,000 of AGI earned equally by Tim and Martha.  What amount of child and dependent care tax credit can they claim on their Form 1040?  How would your answer differ (if at all) if the couple had AGI of $36,000 that was earned entirely by Tim?
49.  Jeremy and Celeste paid the following for their daughter, Alyssa, to attend University of Colorado, during 2010.  Alyssa was in her first year of college and attended full-time:

Tuition and fees (for fall semester 2010)    $1,950
Tuition and fees (for spring semester 2011)      1,000
Books                             600
Room and board                  1,200
The spring semester at University of Colorado begins in January.  In addition to the above, Alyssa’s uncle Devin sent $800 as payment for her tuition directly to the University.  Jeremy and Celeste have modified AGI of $165,000.  What is the amount of qualifying expenses for purposes of the American Opportunity Tax credit (AOTC)?  What is the amount of the AOTC that Jeremy and Celeste can claim based on their AGI?
Chapter 10, complete problem 49 and problem 57
49. Allison is paid $470 per week.  What is the amount of federal income tax withheld from Allison’s paycheck under the following conditions?  Use the percentage method table in the appendix to this chapter.

a. Allison is single and claims three withholding allowances
b. Allison is married and claims three withholding allowances
c. Allison is single and claims one withholding allowance.

57.  Jones Company has the following employees on payroll:

Semimonthly         Withholding        Marital
Payroll        Allowances        Status
Heather        $4,500                    4            Married
Keith            $4,800                    3            Married
Thad            $2,000                    1            Single
Abbie            $3,500                    2            Single

Calculate the payroll for the last pay period in April.  Include in your calculations federal withholding, social security and Medicare taxes. 
Chapter 11, complete problem 49 and problem 52
49.  Will, who is single and under age 50, is employed as a full-time tax accountant at a local manufacturing company where he earns $60,000 per year.  He participates in a pension plan through his employer.  Will also operates a small tax practice in his spare time during tax season and has net Schedule C income of $8,000.  He is interested in establishing and contributing to other retirement plans.  What options are available to Will?
52.  Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom have worked for Ken full-time for the last four years.  The office assistant earns $30,000 per year and each drafter earns $40,000.  Ken’s net earnings from self-employment (after deducting all expenses and one-half of self-employment taxes) are $305,000.  Ken is considering whether to establish an SEP plan and has a few questions.
a)    Is he eligible to establish an SEP plan?
b)    Is he required to cover his employees under the plan?  Why or why not? 
c)    If his employees must be covered, what is the maximum amount that can be contributed on their behalf?
d)    If the employees are not covered, what is the maximum amount Ken can contribute for himself?
e)    If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself?  (Hint:  Calculate the employee amounts first.)  Ignore any changes in Ken’s self-employment tax.

Discussion Questions
Tax Credits and Payroll Taxes. From Chapter 9, complete questions 3 and 7, and problem 43. From Chapter 10, complete question 1 and question 7.
Chapter 9, complete questions 3 and 7, and problem 43
3.  For purposes of the tax credit for child and dependent care expenses, explain the limitations concerning the amount of qualified expenses that can be used to calculate the credit.
7.  Explain what qualifies as education expenses for the purposes of educational tax credits.
43.  Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year.  Adrienne paid $2,900 in child care expenses so that she would be able to work.  Of this amount, $500 was paid to Adrienne’s mother whom Adrienne cannot claim as a dependent.  Adrienne earned $1,900 from her job as a freelance writer and received alimony payments of $21,000 from her ex-husband.  What amount, if any, of child and dependent care tax credit can Adrienne claim?
Chapter 10, complete question 1 and question 7
1.  What type of compensation is subject to employer withholding?
7.   When are employees required to report tips to their employer?  Are tips subject to the same withholding requirements as regular salary?

Payroll Taxes and Retirement Plans. From Chapter 10, complete questions 12 and 13. From Chapter 11, complete question 5, question 15, and question 19.
Chapter 10, complete questions 12 and 13
12.  What are the penalties for not making timely payroll deposits?
13.   If a business fails to make payroll deposits, who is held responsible?

Chapter 11, complete question 5, question 15, and question 19
5.  What are the differences between a defined-benefit pension plan and a defined-contribution pension plan?
15.  Briefly discuss the conditions necessary for a taxpayer to be permitted to make tax-deductible contributions to a traditional IRA.
19.  Anne, a single taxpayer under age 50, has wage income of $74,000 and is not covered under a retirement plan by her employer.  She would like to start a retirement plan if possible.  What options are available to her?

ACC 401 Week 4 Assignment Tax Credits and Deductions - $10.00

ACC 401 Week 4 Assignment Tax Credits and Deductions

Tax Credits and Deductions. From Chapter 9, complete Problem 42 and problem 49. From Chapter 10, complete problem 49 and problem 57. From Chapter 11, complete problem 49 and problem 52.
Chapter 9, complete Problem 42 and problem 49
42.  Tim and Martha paid $7,900 in qualified employment-related expenses for their three young children who live with them in their household.  Martha received $1,800 of dependent care assistance from her employer, which was properly excluded from gross income.  The couple had $57,000 of AGI earned equally by Tim and Martha.  What amount of child and dependent care tax credit can they claim on their Form 1040?  How would your answer differ (if at all) if the couple had AGI of $36,000 that was earned entirely by Tim?
49.  Jeremy and Celeste paid the following for their daughter, Alyssa, to attend University of Colorado, during 2010.  Alyssa was in her first year of college and attended full-time:

Tuition and fees (for fall semester 2010)    $1,950
Tuition and fees (for spring semester 2011)      1,000
Books                             600
Room and board                  1,200
The spring semester at University of Colorado begins in January.  In addition to the above, Alyssa’s uncle Devin sent $800 as payment for her tuition directly to the University.  Jeremy and Celeste have modified AGI of $165,000.  What is the amount of qualifying expenses for purposes of the American Opportunity Tax credit (AOTC)?  What is the amount of the AOTC that Jeremy and Celeste can claim based on their AGI?
Chapter 10, complete problem 49 and problem 57
49. Allison is paid $470 per week.  What is the amount of federal income tax withheld from Allison’s paycheck under the following conditions?  Use the percentage method table in the appendix to this chapter.

a. Allison is single and claims three withholding allowances
b. Allison is married and claims three withholding allowances
c. Allison is single and claims one withholding allowance.

57.  Jones Company has the following employees on payroll:

Semimonthly         Withholding        Marital
Payroll        Allowances        Status
Heather        $4,500                    4            Married
Keith            $4,800                    3            Married
Thad            $2,000                    1            Single
Abbie            $3,500                    2            Single

Calculate the payroll for the last pay period in April.  Include in your calculations federal withholding, social security and Medicare taxes. 
Chapter 11, complete problem 49 and problem 52
49.  Will, who is single and under age 50, is employed as a full-time tax accountant at a local manufacturing company where he earns $60,000 per year.  He participates in a pension plan through his employer.  Will also operates a small tax practice in his spare time during tax season and has net Schedule C income of $8,000.  He is interested in establishing and contributing to other retirement plans.  What options are available to Will?
52.  Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom have worked for Ken full-time for the last four years.  The office assistant earns $30,000 per year and each drafter earns $40,000.  Ken’s net earnings from self-employment (after deducting all expenses and one-half of self-employment taxes) are $305,000.  Ken is considering whether to establish an SEP plan and has a few questions.
a)    Is he eligible to establish an SEP plan?
b)    Is he required to cover his employees under the plan?  Why or why not? 
c)    If his employees must be covered, what is the maximum amount that can be contributed on their behalf?
d)    If the employees are not covered, what is the maximum amount Ken can contribute for himself?
e)    If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself?  (Hint:  Calculate the employee amounts first.)  Ignore any changes in Ken’s self-employment tax.

ACC 401 Week 4 DQ1 - $7.50

ACC 401 Week 4 DQ1

Tax Credits and Payroll Taxes. From Chapter 9, complete questions 3 and 7, and problem 43. From Chapter 10, complete question 1 and question 7.
Chapter 9, complete questions 3 and 7, and problem 43
3.  For purposes of the tax credit for child and dependent care expenses, explain the limitations concerning the amount of qualified expenses that can be used to calculate the credit.
7.  Explain what qualifies as education expenses for the purposes of educational tax credits.
43.  Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year.  Adrienne paid $2,900 in child care expenses so that she would be able to work.  Of this amount, $500 was paid to Adrienne’s mother whom Adrienne cannot claim as a dependent.  Adrienne earned $1,900 from her job as a freelance writer and received alimony payments of $21,000 from her ex-husband.  What amount, if any, of child and dependent care tax credit can Adrienne claim?
Chapter 10, complete question 1 and question 7
1.  What type of compensation is subject to employer withholding?
7.   When are employees required to report tips to their employer?  Are tips subject to the same withholding requirements as regular salary?

ACC 401 Week 4 DQ2 - $7.50

ACC 401 Week 4 DQ2

Payroll Taxes and Retirement Plans. From Chapter 10, complete questions 12 and 13. From Chapter 11, complete question 5, question 15, and question 19.
Chapter 10, complete questions 12 and 13
12.  What are the penalties for not making timely payroll deposits?
13.   If a business fails to make payroll deposits, who is held responsible?

Chapter 11, complete question 5, question 15, and question 19
5.  What are the differences between a defined-benefit pension plan and a defined-contribution pension plan?
15.  Briefly discuss the conditions necessary for a taxpayer to be permitted to make tax-deductible contributions to a traditional IRA.
19.  Anne, a single taxpayer under age 50, has wage income of $74,000 and is not covered under a retirement plan by her employer.  She would like to start a retirement plan if possible.  What options are available to her?