2 Jasmine, the owner of Hot wheels Ltd, withdrew $5 000 from her business bank account to pay for her personal holiday and recorded it as a business travel expense. Explain, using an accounting theory, if her actions are appropriate.
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- Suppose you form a legal partnership with your best friend, and she purchases consulting services calling for a $100,000 fee. Your business is broke, and you never wanted the consultants to work for you-only your partner did. For how much of this debt are you legally liable? O a. The proportion reflected by the proportion of the business owned O b. Only an amount equal to the assets of the business O c. All of the $100,000 O d. $50,000 O e. $25,0001. The imputed interest rules apply to which of the following type of loan? a.Coercion-related loans b.Loans from one employee to another c.Shareholder-corporation loans made from a shareholder to a corporation d.Gift loans made out of love or affection e.Loans made between two objective parties at the market rate of interest 2. In December 2022, Bellamy collected the December 2022 and January 2023 rent from a tenant. Bellamy is a cash basis taxpayer. The amount collected in December 2022 for the 2023 rent should be included in the 2023 gross income. True FalseSandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense? (a) $2,200 (b) $4,500 (c) $8,000 (d) $10,200 Choose the correct answer and defend your choice in 2-3 sentences.
- 10.Which of the following would be a business bad debt if it were uncollectible? a) A taxpayer loans his father $10,000 to start a business b) A tax payer loans his son $1,000 to purchase a rental house. c) A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided. d) None of these answers is correctThe following pertains to Ana, a resident citizen taxpayer: Fruits harvested to be sold at a later date 30,000 Interest on bank deposits 1,000 Dividends declared by ABC Company 3,000 Increase in the market value of lot 10,000 Gambling winnings 9,000 Gain on sale of goods by branch office 5,000 Income on goods delivered by home office to branch office for sale by the latter 4,000 Indemnity received for moral damages claimed 50,000 Ana’s employer cancelled her (Ana) first debt upon her request 5,000 Ana’s employer offset Ana’s second debt against her salary 4,000 69. Compute the total gross income of Ana. A. 22,000 B. 23,000 C. 58,000 D. 103,000LO.3 Vella owns and operates an illegal gambling establishment. In connection with this activity, he has the following expenses during the year: Rent $ 24,000Bribes 40,000Travel expenses 4,000Utilities 18,000Wages 230,000Payroll taxes 13,800Property insurance 1,600Illegal kickbacks 22,000What are Vella’s total deductible expenses for tax purposes?
- Keiji Jones is the owner of a small retail business operated as a sole proprietorship. During 2022, his business recorded the following items of income and expense: Revenue from inventory sales Cost of goods sold Business license tax Rent on retail space. Supplies Wages paid to employees Payroll taxes Utilities Required: $ 147,000 33,500 2,400 42,000 15,000 22,000 1,700 3,600 a. Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in Keiji's 2022 Form 1040. b. Compute self-employment tax payable on the earnings of Keiji's sole proprietorship by completing a 2022 Schedule SE, Form 1040. c. Assume that Keiji's business is not a service business, and that it has $155,000 unadjusted basis in tangible depreciable property. Calculate Keiji's 2022 QBI deduction, before any overall taxable income limitation. Complete this question by entering your answers in the tabs below. Schedule C Schedule SE Part a Part b Part c Assume that Keiji's…When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax basis) and $12,000 of accounts payable from her cash-method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000. Assume the transfer qualifies under §351. Note: Leave no answer blank. Enter zero if applicable. Required: What is the amount of the gain Jayne must recognize on the exchange and its character? What is Jayne's basis in the Spotfree stock received in the exchange?Auchiel and Ben are working in patnership as accountants. Kuria gives auchiel ksh. 100,000 for investment in some good security. Auchiel hides this to co-partner (Ben) and misappropriates the money. Kuria files a suit on the firm for the recovery of his ksh. 100,000 in your opinion, will he succeed? Give reasons.
- What is the taxpayer's gross income in each of the following situations? Do not type a dollar sign. Use commas when appropriate as in 3,500. If the answer is zero, type a 0. a. Myra received a salary of $80,000 from her employer, Green Construction. b. In July, Green Construction gave Myra an all-expense-paid trip to Las Vegas (value of $3,200) for exceeding her sales goals. c. Darrin received $9,000 from his employer to help him pay his medical expenses not covered by insurance, this payment is not available to all employees. d. Blake received $5,000 from his deceased wife's employer to help him in his time of greatest need." e. Austin collected $50,000 as the beneficiary of a group term life insurance policy when his wife died. The premiums on the policy were paid by his deceased wife's employer.Compute taxoble income under the head Income from other sources of Mrs. X from the following data: Porticulars Amount Private tuitlon fee recelved Winning from lottery Award from KBC (a TV show) [Gross] Pension from employer of deceased husband 10,000 2,000 3.20,000 25,000 25.000 Interest on bank deposit Directors fee (Gross) 5,000 25,000 Letting out of vacant land Remuneration for checking the examiniation copy of employer's school 10,000 10,000 Remuneration for checking the examinatlon copy of CA 5,000 Income tax refund 100 Interest on income tax refund 10,000 Composite rent (related expenditures are t 5,000) 20,000 Rent on sub-letting of house property (rent paid to original owner 12,000) 2,000 Income tax paid 18,000 Payment made for personal expenses 2,000 Payment made to LIC as premlum(7) Refer again to Chapter 12, section 12-4, LIKE-KIND EXCHANGES. Mr. X owned an apartment building. He exchanged it for Ms. Y’s mansion, which Mr. X remodeled and uses as his office for his Schedule C accounting practice. Here are some additional facts: Mr. X’s adjusted basis in his apartment building was $1,400,000. Ms. Y’s adjusted basis in her mansion was $2,250,000. No cash or other / additional consideration passed in either direction in connection with the exchange. Neither property was encumbered by any debt. On the county property tax rolls, Mr. X’s apartment building was listed at a value of $3.25 million. On the county property tax rolls, Ms. Y’s mansion was listed at a value of $3.6 million. At the time of the exchange and for years before, Ms. Y actually lived in her mansion; it was strictly her personal residence – she never carried on any trade or business there, nor did anything else that ever would have re-sulted in classification of the mansion as anything…